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The largest among Brazil’s aircraft manufacturers, Embraer S.A. (ERJ - Analyst Report) released its aircraft delivery report for the third quarter 2012, ended September 30, 2012. The company delivered 40 aircraft as compared to 55 aircraft delivered in the previous quarter.

Of the total, 27 jets were delivered to commercial aviation market including 17 E-190, 7 E-175 and 3 E-195, while the remaining 13 jets were delivered to executive aviation inclusive of 11 Light and 2 Large jets.

Combining the third quarter results, the company delivered as many as 129 aircraft during the first nine months of 2012. Of these, 83 deliveries were made in the commercial aviation market and 46 in the executive market. Commercial aircraft deliveries included 52 E-190, 17 E-175 and 14 E-195 while executive aircraft deliveries included 40 Light and 6 Large jets.

At the end of third quarter, the company’s firm order backlog stood at approximately $12.4 billion. In terms of aircraft, this includes 102 E-190, 35 E-195, 31 E-175 and 10 E-170 jets.

Weak performance in the third quarter as compared with the previous quarter as well as a meagre 129 deliveries in the first nine months are reasons enough for raising our scepticism over the company achieving its 195-215 aircraft delivery target for 2012.     

The current Zacks Consensus Estimate for the third quarter of 2012 is 55 cents, reflecting a year-over-year decline of 18.6%. Estimates for 2012 and 2013 are $2.09 and $2.98, reflecting annual growth of 91.7% and 42.7%, respectively.

We currently maintain a Neutral recommendation on Embraer. The stock also bears a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating. The company’s major competitors Boeing Co. (BA - Analyst Report) and Lockheed Martin Corporation (LMT - Analyst Report) have a Zacks #3 (Hold) Rank while Grumman Corporation (NOC - Analyst Report) holds a Zacks #2 (Buy) Rank.

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