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Here's Why You Should Add Embraer Stock to Your Portfolio Right Now
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Embraer S.A. (ERJ - Free Report) , with rising earnings estimates, robust return on equity (ROE), increasing investments and a solid backlog, offers a great investment opportunity in the Zacks Aerospace Defense industry.
Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock an attractive investment pick at the moment.
Growth Projections & Surprise History of Embraer
The Zacks Consensus Estimate for ERJ’s 2024 earnings per share (EPS) has increased 26.5% to $2.05 in the past 30 days, indicating a massive 376.7% improvement from the year-ago figure.
The consensus estimate for total revenues is $6.25 billion, which indicates growth of 18.6% from the 2023 figure.
ERJ delivered an average earnings surprise of 127.28% in the last four quarters.
ERJ’s ROE
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. ERJ’s current ROE is 11.62% compared with the industry’s average of 9.59%. This indicates that the company has been utilizing its funds more constructively than its peers in the sector.
ERJ’s Debt Position
Currently, the company’s total debt to capital is 43.65%, better than the industry’s average of 55%.
ERJ’s times interest earned (TIE) ratio at the end of the third quarter was 2.56. A TIE ratio of more than one indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
Embraer’s Liquidity
ERJ’s current ratio at the end of the third quarter was 1.56. A current ratio of greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
ERJ’s Backlog and Investments
International Air Transport Association projects total global revenue passenger kilometers (RPKs) to increase 11.6% in 2024 from the 2023 level, backed by a solid 10.4% rise (anticipated) in the global air passenger numbers. To reap the benefits of such growth opportunities, airlines are expanding their fleet size, which in turn, has been bolstering order growth for jet manufacturers like Embraer.
Embraer had an excellent backlog of $15.5 billion for commercial aviation and executive aviation segments as of Sept. 30, 2024.
Apart from manufacturing aircraft, Embraer has also been undertaking other initiatives to strengthen its footprint in the global aerospace sector. In October 2024, the company disclosed its plan to invest up to $70 million in new Maintenance, Repair and Overhaul (MRO) facilities in the United States, with the launch of a new service center at the Perot Field Alliance Airport, in Fort Worth, TX. This facility expansion is likely to bolster ERJ’s position in the aircraft MRO market space.
ERJ Stock’s Price Performance
Shares of ERJ have gained 12.9% in the past three months against the industry’s 9.6% decline.
Leidos delivered an average earnings surprise of 29.92% in the last four quarters. The Zacks Consensus Estimate for LDOS’ 2024 sales is pinned at $16.39 billion, which indicates year-over-year growth of 6.1%.
Intuitive Machines delivered an average earnings surprise of 34.50% in the last four quarters. The consensus estimate for LUNR’s 2024 sales is pinned at $230.3 million, which indicates year-over-year growth of 189.6%.
AAR delivered an average earnings surprise of 1.80% in the last four quarters. The Zacks Consensus Estimate for AIR’s 2024 sales is pinned at $2.70 billion, which indicates year-over-year growth of 21.9%.
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Here's Why You Should Add Embraer Stock to Your Portfolio Right Now
Embraer S.A. (ERJ - Free Report) , with rising earnings estimates, robust return on equity (ROE), increasing investments and a solid backlog, offers a great investment opportunity in the Zacks Aerospace Defense industry.
Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock an attractive investment pick at the moment.
Growth Projections & Surprise History of Embraer
The Zacks Consensus Estimate for ERJ’s 2024 earnings per share (EPS) has increased 26.5% to $2.05 in the past 30 days, indicating a massive 376.7% improvement from the year-ago figure.
The consensus estimate for total revenues is $6.25 billion, which indicates growth of 18.6% from the 2023 figure.
ERJ delivered an average earnings surprise of 127.28% in the last four quarters.
ERJ’s ROE
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. ERJ’s current ROE is 11.62% compared with the industry’s average of 9.59%. This indicates that the company has been utilizing its funds more constructively than its peers in the sector.
ERJ’s Debt Position
Currently, the company’s total debt to capital is 43.65%, better than the industry’s average of 55%.
ERJ’s times interest earned (TIE) ratio at the end of the third quarter was 2.56. A TIE ratio of more than one indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
Embraer’s Liquidity
ERJ’s current ratio at the end of the third quarter was 1.56. A current ratio of greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
ERJ’s Backlog and Investments
International Air Transport Association projects total global revenue passenger kilometers (RPKs) to increase 11.6% in 2024 from the 2023 level, backed by a solid 10.4% rise (anticipated) in the global air passenger numbers. To reap the benefits of such growth opportunities, airlines are expanding their fleet size, which in turn, has been bolstering order growth for jet manufacturers like Embraer.
Embraer had an excellent backlog of $15.5 billion for commercial aviation and executive aviation segments as of Sept. 30, 2024.
Apart from manufacturing aircraft, Embraer has also been undertaking other initiatives to strengthen its footprint in the global aerospace sector. In October 2024, the company disclosed its plan to invest up to $70 million in new Maintenance, Repair and Overhaul (MRO) facilities in the United States, with the launch of a new service center at the Perot Field Alliance Airport, in Fort Worth, TX. This facility expansion is likely to bolster ERJ’s position in the aircraft MRO market space.
ERJ Stock’s Price Performance
Shares of ERJ have gained 12.9% in the past three months against the industry’s 9.6% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the same sector are Leidos Holdings, Inc. (LDOS - Free Report) , Intuitive Machines, Inc. (LUNR - Free Report) and AAR Corporation (AIR - Free Report) . Leidos sports a Zacks Rank #1 (Strong Buy), while Intuitive Machines and AAR carry a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Leidos delivered an average earnings surprise of 29.92% in the last four quarters. The Zacks Consensus Estimate for LDOS’ 2024 sales is pinned at $16.39 billion, which indicates year-over-year growth of 6.1%.
Intuitive Machines delivered an average earnings surprise of 34.50% in the last four quarters. The consensus estimate for LUNR’s 2024 sales is pinned at $230.3 million, which indicates year-over-year growth of 189.6%.
AAR delivered an average earnings surprise of 1.80% in the last four quarters. The Zacks Consensus Estimate for AIR’s 2024 sales is pinned at $2.70 billion, which indicates year-over-year growth of 21.9%.