Embraer S.A. (ERJ Quick QuoteERJ - 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 #1 (Strong Buy) stock an attractive investment pick at the moment.

Growth Projections & Surprise History of Embraer

The Zacks Consensus Estimate for ERJ’s 2025 earnings per share (EPS) has increased 9.3% to $2.24 in the past 30 days.

The consensus estimate for total revenues is $7.36 billion, which indicates growth of 15.1% from the year-ago figure.

ERJ delivered an average earnings surprise of 138.39% 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 14.3% compared with the industry’s average of 6.25%. This indicates that the company has been utilizing its funds more constructively than its peers in the industry.

ERJ’s Debt Position

Currently, the company’s total debt to capital is 42.69%, better than the industry’s average of 53.11%.

ERJ’s times interest earned (TIE) ratio at the end of the fourth quarter was 2.34. 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 fourth quarter was 1.48, which was above the industry’s current ratio of 1.17. 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 RPKs to increase 8% in 2025 from the 2024 level, backed by a solid 6.7% expected rise 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 $17.6 billion for the commercial aviation and executive aviation segments as of Dec. 31, 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 35.5% in the past six months against the industry’s 8.2% decline.

Image Source: Zacks Investment Research

Other Stocks to Consider

Other top-ranked stocks from the same sector are Heico (HEI Quick QuoteHEI - Free Report) , Triumph Group (TGI Quick QuoteTGI - Free Report) and Leidos Holdings, Inc. (LDOS Quick QuoteLDOS - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heico has a long-term earnings growth rate of 17%. The Zacks Consensus Estimate for HEI’s fiscal 2025 sales is pinned at $4.29 billion, which indicates year-over-year growth of 11.3%.

Triumph Group delivered an average earnings surprise of 159.38% in the last four quarters. The Zacks Consensus Estimate for TGI’s fiscal 2026 sales is pinned at $1.32 billion, which indicates growth of 11.5% from the fiscal 2025 estimated figure.

Leidos Holdings has a long-term earnings growth rate of 7.4%. The Zacks Consensus Estimate for LDOS’ 2025 sales is pinned at $17.1 billion, which indicates year-over-year growth of 2.6%.