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Embraer-empresa Brasileira De Aeronautica (ERJ)
NYSE:ERJ
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Embraer SA
(NYSE:ERJ)
75Outperform
Positive Factors
Commercial Deliveries
In the Commercial division, Embraer demonstrated robust performance, achieving 31 aircraft deliveries in the 4Q, which included two E190-E2s, 18 E195-E2s and 11 E175s.
Financial Performance
Shares of Embraer (ERJ) are up ~100% on improving operating results, sustained positive FCF, and a large backlog increase.
Market Orders
Embraer recently secured a significant $7 billion business jet order from FlexJet, contributing to positive market sentiment.
Negative Factors
Order Cancellations
There may be higher risk to Embraer should order cancellation occur for any reason.
Profitability Concerns
An implied total tariff of up to $300M could still eat into profitability and/or weigh on the company's financial performance.
Tariff Risk
Unpriced tariff risk could arrive on April 2nd, presenting a material risk, particularly if VAT rates are included.
Embraer SA (ERJ) vs. S&P 500 (SPY)
Market Cap
$8.74B
Dividend YieldN/A
Average Volume (3M)2.26M
Price to Earnings (P/E)24.7
Beta (1Y)1.29
Revenue Growth22.75%
EPS Growth117.20%
CountryUS
Employees21,892
SectorIndustrials
Sector Strength67
IndustryAerospace & Defense
Share Statistics
EPS (TTM)1.92
Shares Outstanding183,658,200
10 Day Avg. Volume2,342,151
30 Day Avg. Volume2,259,834
Financial Highlights & Ratios
PEG Ratio0.21
Price to Book (P/B)N/A
Price to Sales (P/S)1.84
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$52.50Price Target Upside10.57% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Embraer SA Business Overview & Revenue Model
Company DescriptionEmbraer S.A. designs, develops, manufactures, and sells aircrafts and systems in Brazil, North America, Latin America, the Asia Pacific, Brazil, Europe, and internationally. It operates through Commercial Aviation; Defense and Security; Executive Jets; Service & Support; and Other segments. The Commercial Aviation segment designs, develops, and manufactures a variety of commercial aircrafts. The Defense and Security segment engages in the research, development, production, modification, and support for military defense and security aircraft; and offers a range of products and integrated solutions that include radars and special space systems, as well as information and communications systems comprising command, control, communications, computer, intelligence, surveillance, and reconnaissance systems. The Executive Jets segment develops, produces, and sells executive jets. It also leases Legacy 600 and Legacy 650 executive jets in the super midsize and large categories; Legacy 450 and Legacy 500 executive jets in the midlight and midsize categories; Phenom family executive jets in the entry jet and light jet categories; Lineage 1000, an ultra-large executive jet; and Praetor 500 and Praetor 600, disruptive executive jets in the midsize and super midsize categories. The Service & Support segment offers after-service solutions, support, and maintenance, repair, and overhaul services for commercial, executive, and defense aircrafts; provides aircraft components and engines; and supplies steel and composite aviation structures to various aircraft manufacturers. The Other segment is involved in the supply of fuel systems, structural parts, and mechanical and hydraulic systems; and production of agricultural crop-spraying aircraft. The company was formerly known as Embraer-Empresa Brasileira de Aeronáutica S.A. and changed its name to Embraer S.A. in November 2010. Embraer S.A. was incorporated in 1969 and is headquartered in São Paulo, Brazil.
How the Company Makes MoneyEmbraer SA generates revenue through the sale of its aircraft across its various sectors: commercial aviation, executive aviation, and defense & security. In commercial aviation, Embraer earns money by selling regional jets to airlines around the world. In executive aviation, the company provides business jets to corporate clients and private individuals. The defense & security division generates income through government contracts for military aircraft and related services. Additionally, Embraer supports its aircraft with a suite of after-sales services, including maintenance, repair, and overhaul (MRO), which contributes to ongoing revenue. Significant partnerships, such as joint ventures and collaborations with other aerospace companies, also play a crucial role in expanding Embraer's market reach and enhancing its revenue streams.
Embraer SA Financial Statement Overview
Summary
Embraer SA demonstrates commendable financial health with strong profitability and cash flow generation. The income statement shows improved profitability and robust revenue growth, while the balance sheet reflects a stable position with manageable leverage. The cash flow statement indicates strong cash generation capabilities, supporting future growth. However, there is room for improvement in asset financing.Income Statement
Embraer SA's income statement shows strong recent performance with a marked improvement in profitability. The gross profit margin stands at 17.34% TTM, showcasing efficient cost management. The net profit margin improved significantly, with TTM figures at 9.05%, indicating effective cost controls and increased profitability. Revenue growth is robust with a significant increase from the previous year, demonstrating strong market demand. EBIT and EBITDA margins are healthy at 8.17% and 21.07% respectively, reflecting solid operational efficiency.85
Very Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.88, indicating manageable leverage levels. Return on equity is strong at 39.90%, suggesting effective use of shareholders' funds. The equity ratio at 26.85% highlights a balanced capital structure, though slightly lower than ideal, it suggests room for improvement in asset financing. The company has maintained adequate cash reserves, supporting liquidity needs.78
Positive
Cash Flow
Embraer SA's cash flow statements reveal strong cash generation capabilities with a significant free cash flow growth rate. Operating cash flow to net income ratio is high at 3.01, indicating strong cash conversion efficiency. Free cash flow to net income ratio stands at 2.11, reflecting robust cash flow generation relative to earnings, supporting future growth and investment opportunities.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.06B | 5.27B | 4.54B | 4.20B | 3.77B | 5.46B | Gross Profit |
| 1.06B | 909.60M | 912.20M | 659.60M | 477.60M | 795.50M | EBIT |
| 618.20M | 314.50M | 3.40M | 201.30M | -247.00M | -83.70M | EBITDA |
| 1.07B | 583.40M | 215.90M | 440.30M | -105.17M | 126.10M | Net Income Common Stockholders |
| 499.50M | 164.00M | -203.50M | -43.50M | -728.30M | -316.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.48B | 2.15B | 2.31B | 2.57B | 2.70B | 2.72B | Total Assets |
| 10.77B | 10.78B | 10.14B | 10.15B | 10.55B | 10.57B | Total Debt |
| 2.72B | 2.98B | 3.27B | 4.09B | 4.53B | 3.46B | Net Debt |
| 1.80B | 1.35B | 1.46B | 2.27B | 2.64B | 1.15B | Total Liabilities |
| 7.73B | 7.74B | 7.32B | 7.38B | 7.61B | 6.96B | Stockholders Equity |
| 2.79B | 2.79B | 2.57B | 2.67B | 2.83B | 3.52B |
| Cash Flow | Free Cash Flow | ||||
| 2.64B | 186.20M | 495.30M | 247.10M | -1.51B | 326.00M | Operating Cash Flow |
| 3.77B | 617.00M | 751.30M | 515.30M | -1.29B | 893.80M | Investing Cash Flow |
| -1.33B | -447.60M | -109.50M | -131.60M | -105.30M | 407.70M | Financing Cash Flow |
| -253.38M | -348.70M | -669.20M | -430.60M | 1.01B | -257.00M |
Embraer SA Technical Analysis
Positive
47.48
Price Trends
45.56
Positive
41.33
Positive
36.51
Positive
Market Momentum
1.25
Positive
44.90
Neutral
2.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERJ, the sentiment is Positive. The current price of 47.48 is below the 20-day moving average (MA) of 51.22, above the 50-day MA of 45.56, and above the 200-day MA of 36.51, indicating a neutral trend. The MACD of 1.25 indicates Positive momentum. The RSI at 44.90 is Neutral, neither overbought nor oversold. The STOCH value of 2.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ERJ.
Embraer SA Risk Analysis
Embraer SA disclosed 38 risk factors in its most recent earnings report. Embraer SA reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Embraer SA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $74.38B | 17.90 | 27.75% | 1.59% | 4.44% | 110.33% | |
75 Outperform | $8.74B | 24.72 | 12.07% | ― | 22.75% | 117.20% | |
75 Outperform | $72.86B | 19.78 | 17.44% | 2.11% | 12.88% | 13.78% | |
74 Outperform | $104.11B | 19.96 | 81.04% | 2.86% | 5.14% | -19.14% | |
64 Neutral | $13.65B | 17.24 | 11.63% | 0.11% | 0.14% | -5.38% | |
62 Neutral | $8.27B | 14.02 | 2.58% | 3.08% | 3.83% | -15.91% | |
46 Neutral | $134.34B | ― | -162.23% | ― | -14.49% | -399.90% |
* Industrials Sector Average
Performance Comparison
ERJ
Embraer SA
47.48
21.84
85.18%
BA
Boeing
179.11
-10.39
-5.48%
GD
General Dynamics
269.49
-16.28
-5.70%
LMT
Lockheed Martin
442.28
1.06
0.24%
NOC
Northrop Grumman
513.82
50.44
10.89%
TXT
Textron
75.28
-19.96
-20.96%
Embraer SA Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: 10.70% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
Embraer reported a historic year with record-breaking revenue and backlog, significant sales achievements across divisions, and improved financial health. However, supply chain challenges and uncertainties in the U.S. market for the E175-E2 present obstacles. The outlook for 2025 remains positive, though cautious due to potential volatility in cash flow.Highlights
Record Revenue and Backlog
Embraer achieved record revenue of $6.4 billion, the highest in its history, and an all-time backlog record of $26.3 billion.
ANA E190-E2 Order
All Nippon Airways purchased 15 E190-E2 jets, marking the first sale of the E2 family in Japan.
Executive Aviation Success
Largest order in Executive Aviation with a $7 billion contract from Flexjet, leading to a record $7.4 billion backlog.
Defense and Security Performance
Best sales performance with a 40% revenue increase and a record $4.2 billion backlog.
Strong Free Cash Flow
Generated $996 million in adjusted free cash flow in Q4 and $676 million for 2024.
Improved Financial Position
Net debt reduced to $111 million, and investment-grade status achieved by all three main rating agencies.
Lowlights
Supply Chain Challenges
Ongoing supply chain issues continue to pose challenges, affecting production and delivery schedules.
Uncertainty in U.S. Market for E175-E2
Postponement of E175-E2 development due to U.S. mainline scope clause issues, impacting market potential.
Volatile Free Cash Flow Outlook for 2025
Guidance for 2025 free cash flow is lower than 2024, affected by defense prepayments and working capital requirements.
Company Guidance
In the recent earnings call, Embraer provided an impressive overview of its fiscal performance for 2024, highlighting several key metrics. The company achieved a record revenue of $6.4 billion, surpassing its modified and original guidance, and set a new all-time backlog record of $26.3 billion, reflecting a strong book-to-bill ratio of 2.2. The Executive Aviation division celebrated a $7 billion contract with Flexjet, contributing to its $7.4 billion backlog and a leading 2.7 book-to-bill ratio. Defense & Security ended 2024 with its best sales performance ever, achieving a 3.3 book-to-bill ratio. Commercial Aviation secured firm contracts for 90 E175 aircraft, closing the year with a $10.2 billion backlog and a 1.6 book-to-bill ratio. Service and Support also reached a new high with a $4.6 billion backlog and a 1.9 book-to-bill ratio. Financially, Embraer reported an adjusted EBIT of $780 million with an 11.1% margin, and a notable free cash flow of $676 million. The company's net debt was close to zero, positioning it to potentially start paying dividends. Looking forward, Embraer's 2025 guidance aims for continued double-digit growth, with expectations of delivering between 77 to 85 commercial aircraft and 145 to 155 executive jets, projecting revenues between $7 billion and $7.5 billion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.