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Embraer (ERJ) Gains But Lags Market: What You Should Know

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In the latest trading session, Embraer (ERJ - Free Report) closed at $10.65, marking a +0.66% move from the previous day. The stock lagged the S&P 500's daily gain of 1.06%. At the same time, the Dow added 0.71%, and the tech-heavy Nasdaq gained 0.18%.

Coming into today, shares of the plane and jet manufacturer had lost 8.79% in the past month. In that same time, the Aerospace sector lost 1.47%, while the S&P 500 lost 1.14%.

Wall Street will be looking for positivity from Embraer as it approaches its next earnings report date. On that day, Embraer is projected to report earnings of $0.16 per share, which would represent year-over-year growth of 188.89%. Meanwhile, our latest consensus estimate is calling for revenue of $1.19 billion, up 24.49% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.54 per share and revenue of $4.73 billion. These totals would mark changes of +460% and +12.72%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Embraer. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 471.05% higher. Embraer is currently sporting a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, Embraer is holding a Forward P/E ratio of 19.5. For comparison, its industry has an average Forward P/E of 19.07, which means Embraer is trading at a premium to the group.

Also, we should mention that ERJ has a PEG ratio of 1.15. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ERJ's industry had an average PEG ratio of 1.87 as of yesterday's close.

The Aerospace - Defense industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 100, which puts it in the top 40% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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