Embraer SA (ERJ) AI Stock Analysis

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Embraer SA

(NYSE:ERJ)

Rating:76Outperform

Price Target:

$55.00

▲(13.90%Upside)

Embraer earns a strong overall score of 76 due to its robust financial performance, positive technical momentum, and optimistic earnings guidance. The company's successful turnaround from past losses, coupled with record revenue and high backlogs, positions it well for future growth. Valuation appears slightly high, which could limit upside, and challenges such as U.S. tariffs and delivery issues warrant attention. Nevertheless, Embraer's resilience and strategic positioning in the Aerospace & Defense industry underpin a positive outlook.

Positive Factors

Market Sentiment

Shares of Embraer are up approximately 100% in a year on improving operating results, sustained positive free cash flow, and a large backlog increase.

New Orders

Embraer recently secured a significant $7 billion business jet order from FlexJet, contributing to positive market sentiment.

Revenue Generation

With an all-time high backlog of USD26.4bn at end-Q1, Embraer offers strong revenue generation in the coming quarters.

Negative Factors

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. SPDR S&P 500 ETF (SPY)

Market Cap

$8.80B

Dividend Yield0.41%

Average Volume (3M)1.12M

Price to Earnings (P/E)22.3

Beta (1Y)1.01

Revenue Growth22.29%

EPS Growth51.90%

CountryUS

Employees20,923

SectorIndustrials

Sector Strength85

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.40

Shares Outstanding183,658,200

10 Day Avg. Volume1,194,307

30 Day Avg. Volume1,120,189

Financial Highlights & Ratios

PEG Ratio-0.74

Price to Book (P/B)16.53

Price to Sales (P/S)0.00

P/FCF Ratio85.69

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$50.33

Price Target Upside4.22% Upside

Rating ConsensusHold

Number of Analyst Covering4

Embraer SA Business Overview & Revenue Model

Company DescriptionEmbraer SA is a leading aerospace company based in Brazil, specializing in the design, development, manufacturing, and sale of aircraft and systems. The company operates in several sectors including commercial aviation, executive aviation, defense & security, and agricultural aviation. Embraer is renowned for its innovative and efficient aircraft solutions, offering a wide range of products such as regional jets, executive jets, and military aircraft.

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 Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 3.80%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue growth and operational improvements across segments, particularly in Executive Aviation and Defense. However, concerns over U.S. tariffs and their impact on margins, combined with some delivery issues, present challenges. Despite these issues, the company's financial and operational achievements suggest a positive outlook.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue

Embraer delivered the highest first quarter revenue of the past 90 years at $1.1 billion, marking a 22% increase year-on-year.

Executive Aviation Performance

Executive Aviation reached the highest first quarter revenue since 2014 with a record backlog of $7.6 billion.

Defense and Security Growth

Defense and security revenue grew 72% due to stronger KC-390 revenue recognition and new firm orders from countries like Uruguay and Panama.

Aircraft Deliveries Increase

Aircraft deliveries were up by almost 30% year-on-year, with a total of 30 aircraft delivered in Commercial and Executive Aviation.

Financial Strength

Embraer reduced its net and gross debt positions by $508 million and ended the period with a $26.4 billion backlog, a 25% increase year-on-year.

Adjusted EBITDA Growth

The adjusted EBITDA for the quarter was $109 million with a 9.8% margin, supported by higher volumes in Executive Aviation and lower costs.

Negative Updates

Impact of U.S. Tariffs

U.S. tariffs are estimated to negatively impact EBITDA margin by 90 basis points for 2025, particularly affecting Executive Aviation and Service and Support segments.

Commercial Aviation Deliveries

Commercial Aviation deliveries remained stable with seven aircraft, unable to deliver two additional aircraft due to commercial issues.

Adjusted Free Cash Flow

The company consumed $386 million in adjusted free cash flow due to high working capital needs and inventory preparation.

Service and Support Margin Decrease

The adjusted EBIT margin for Service and Support decreased due to product mix and the start of North American Executive MRO ramp-up.

Company Guidance

During Embraer's first quarter 2025 earnings call, the company provided robust guidance indicating strong performance metrics. Embraer achieved a record first-quarter revenue of $1.1 billion, marking the highest in the past 90 years, with an adjusted EBITDA margin of nearly 10%, the best in five years. The company's backlog reached an all-time high of $26.4 billion, a 25% year-over-year increase. Aircraft deliveries rose by almost 30% year-on-year, underscoring operational efficiency. The Executive Aviation division recorded its highest first-quarter revenue since 2014 with a backlog of $7.6 billion. In Defense and Security, new orders from Sweden, Slovakia, Uruguay, and Panama bolstered a stable $4.2 billion backlog. Commercial Aviation saw a $10 billion backlog, with significant orders expected from Japanese ANA. Service and Support maintained a $4.6 billion backlog, reflecting steady growth. Embraer reiterated its 2025 guidance, anticipating double-digit growth in aircraft deliveries and revenue, while actively working to mitigate the limited impact of recent U.S. tariffs.

Embraer SA Financial Statement Overview

Summary

Embraer demonstrates solid financial performance with steady revenue growth, improved profitability, and efficient cash flow management. The company has successfully turned around from past losses, showing resilience and a positive growth trajectory. While the balance sheet is stable, further reduction in debt could enhance financial flexibility. Overall, Embraer is well-positioned in the Aerospace & Defense industry, with a strong financial foundation to support future growth.

Income Statement

Positive

Embraer has shown strong revenue growth with a TTM increase of 3.23% from the previous year. The gross profit margin stands at 17.78%, and the net profit margin has improved to 6.02% indicating enhanced profitability. The EBIT margin of 10.92% and EBITDA margin of 17.61% reflect operational efficiency. The company's trajectory from negative net income in 2020 to positive in recent years indicates a significant turnaround.

Balance Sheet

Positive

Embraer's balance sheet reveals a stable financial position with a debt-to-equity ratio of 0.68, showing manageable leverage. The return on equity is 12.45%, which is a positive indicator of profitability for shareholders. The equity ratio is 27.26%, suggesting a solid equity base, though there is room for improvement in reducing liabilities further.

Cash Flow

Positive

The company exhibits strong cash flow management, with operating cash flow to net income ratio of 2.51 in TTM, indicating robust cash generation relative to earnings. Free cash flow has grown significantly, with a free cash flow to net income ratio of 1.26, highlighting the company's ability to generate cash efficiently and reinvest in growth.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.60B	6.39B	5.27B	4.54B	4.20B	3.77B
	Gross Profit
1.17B	1.15B	909.60M	912.20M	655.85M	477.60M
	EBIT
721.20M	667.50M	314.50M	-110.50M	201.30M	-323.40M
	EBITDA
1.16B	1.01B	598.20M	228.40M	479.90M	-123.30M
	Net Income Common Stockholders
397.20M	352.50M	164.00M	-185.40M	-44.70M	-731.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.36B	2.20B	2.15B	2.31B	2.57B	2.70B
	Total Assets
11.70B	11.82B	10.78B	10.14B	10.15B	10.52B
	Total Debt
2.17B	2.60B	2.98B	3.27B	4.09B	4.51B
	Net Debt
1.35B	1.04B	1.35B	1.46B	2.27B	2.63B
	Total Liabilities
8.23B	8.48B	7.74B	7.32B	7.38B	7.61B
	Stockholders Equity
3.19B	3.08B	2.79B	2.57B	2.67B	2.79B
Cash Flow		Free Cash Flow
499.10M	405.00M	186.20M	495.30M	247.10M	-1.51B
	Operating Cash Flow
995.20M	871.20M	617.00M	751.30M	515.30M	-1.29B
	Investing Cash Flow
-545.60M	-599.70M	-447.60M	-109.50M	-131.60M	-105.30M
	Financing Cash Flow
-548.40M	-335.70M	-348.70M	-669.20M	-441.04M	1.01B

Embraer SA Technical Analysis

Technical Analysis Sentiment

Positive

Last Price48.29

Price Trends

50DMA

46.15

Positive

100DMA

46.13

Positive

200DMA

41.10

Positive

Market Momentum

MACD

0.59

Negative

RSI

61.76

Neutral

STOCH

80.26

Negative

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 48.29 is above the 20-day moving average (MA) of 47.82, above the 50-day MA of 46.15, and above the 200-day MA of 41.10, indicating a bullish trend. The MACD of 0.59 indicates Negative momentum. The RSI at 61.76 is Neutral, neither overbought nor oversold. The STOCH value of 80.26 is Negative, 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 3 New Risks

We do not have a controlling shareholder and as a result we may be subject to certain risks. Q4, 2023

We are subject to significant competition. Q4, 2023

We face risks of being engaged in a global business and operating in global industries, which may adversely affect us. Q4, 2023

Embraer SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ERJ	76 Outperform	$8.80B	22.27	13.36%	0.41%	22.29%	51.90%
TXT	74 Outperform	$13.97B	17.52	11.70%	0.10%	0.57%	-5.62%
WWD	72 Outperform	$13.81B	37.49	16.35%	0.48%	4.96%	8.41%
DRS	71 Outperform	$12.26B	52.84	9.50%	0.78%	13.58%	25.96%
Sector *	66 Neutral	$4.47B	12.21	5.40%	3.65%	4.14%	-12.00%
BA	58 Neutral	$151.04B	―	-162.23%	―	-9.15%	-406.76%
SPR	37 Underperform	$4.34B	―	81.63%	―	-2.91%	-109.95%

* Industrials Sector Average

Performance Comparison

ERJ

Embraer SA

51.04

23.94

88.34%

Boeing

201.70

26.71

15.26%

DRS

Leonardo Drs

43.66

17.68

68.05%

SPR

Spirit AeroSystems

37.01

5.87

18.85%

TXT

Textron

77.24

-8.63

-10.05%

WWD

Woodward

234.94

50.51

27.39%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.