Embraer SA (ERJ) AI Stock Analysis

Compare

920 Followers

Top Page

Embraer SA

(NYSE:ERJ)

Rating:79Outperform

Price Target:

$66.00

▲(17.27% Upside)

Embraer's strong earnings call performance and positive technical indicators are the most significant factors driving the score. The company's solid financial performance and high dividend yield also contribute positively, although the high P/E ratio suggests a relatively expensive valuation. Concerns about U.S. tariffs and inflationary pressures are noted but do not outweigh the overall positive outlook.

Positive Factors

Financial Performance

Strong deliveries in Executive and Defense, and EVE’s first full-scale prototype flight to embark in 2025.

Order Activity

Order activity in the Commercial Aviation unit has shown strong momentum, supported by a successful Paris Air Show.

Tariff Exemptions

The Trump Executive Order excluding ERJ's products from an incremental 40% tariff on imports from Brazil lifts a significant risk.

Negative Factors

Earnings Miss

Embraer reported 1Q25 adj. EPS of $(0.40), missing BBG $0.06.

Profitability Impact

Assuming a 50% rebate of US product should be exempt from the imports, an implied total tariff of up to $300M could still eat into profitability.

Tariff Risk

The key tariff risk for ERJ is in its Executive Aviation segment.

Embraer SA (ERJ) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$10.33B

Dividend Yield0.09%

Average Volume (3M)2.60M

Price to Earnings (P/E)27.3

Beta (1Y)0.83

Revenue Growth22.95%

EPS Growth-1.01%

CountryUS

Employees20,923

SectorIndustrials

Sector Strength76

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.43

Shares Outstanding183,658,200

10 Day Avg. Volume1,532,061

30 Day Avg. Volume2,600,680

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.14

Enterprise Value/Revenue1.70

Enterprise Value/Gross Profit9.16

Enterprise Value/Ebitda10.93

Forecast

1Y Price Target

$60.14

Price Target Upside6.86% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Embraer SA Business Overview & Revenue Model

Company DescriptionEmbraer SA is a Brazilian aerospace company headquartered in São José dos Campos, specializing in the design, development, manufacturing, and sale of aircraft. It operates in several sectors, including commercial aviation, defense, and executive jets. Embraer is known for its innovative regional jets, such as the E-Jet series, as well as military aircraft and business jets, catering to a diverse global market.

How the Company Makes MoneyEmbraer generates revenue primarily through the sale of aircraft across its three main business segments: Commercial Aviation, Defense & Security, and Executive Jets. The company earns significant income from the sale of new aircraft, as well as from aftermarket services, which include maintenance, repair, and spare parts. Additionally, Embraer has established strategic partnerships and joint ventures, such as its collaboration with Boeing under the Embraer-Boeing joint venture, which enhances its market reach and product offerings. Government contracts and defense orders also contribute to its revenue, particularly in the military segment. Overall, Embraer's revenue model is driven by a combination of aircraft sales, service agreements, and partnerships that strengthen its position in the aerospace industry.

Embraer SA Earnings Call Summary

Earnings Call Date:Aug 05, 2025

(Q2-2025)

% Change Since: -2.65%|

Next Earnings Date:Nov 04, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted Embraer's record-breaking revenue, strong backlog, and significant orders across segments, reflecting solid growth and operational efficiency. However, concerns about U.S. tariffs, challenges with certain customers, and potential inflationary and FX pressures balanced the positive aspects.

Q2-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Embraer delivered the highest second quarter revenue in its history, totaling $1.8 billion, with an adjusted EBIT margin of 10.5%, the highest for a second quarter over the past decade.

Strong Backlog and Book-to-Bill Ratio

The backlog reached a new all-time high of $29.7 billion, driven by strong demand across all business units, with a book-to-bill ratio close to 2:1 in the last 12 months.

Significant Orders and Deliveries

Commercial Aviation saw significant orders including SAS's order of 45 E195-E2s and SkyWest's purchase of 60 E175s. Deliveries were up 30% year-over-year.

Executive Aviation and Defense Success

Executive Aviation delivered record second quarter revenue of $550 million with a robust backlog, and Defense & Security saw a $4.3 billion backlog with notable orders from Portugal and Lithuania.

Debt Reduction and Financial Health

Embraer significantly reduced its gross and net debt by approximately $560 million and $720 million, respectively, with a net debt to EBITDA ratio of 0.7x.

Negative Updates

Impact of U.S. Tariffs

U.S. tariffs continue to be a concern, with a current 10% impact already considered in forecasts. Further negotiations are in progress to address these tariffs.

Challenges with Azul

The restructuring process with customer Azul led to write-offs and provisioning for bad debts, impacting the Service & Support segment's EBIT margin.

Inflationary and FX Pressures

Inflationary pressures, foreign exchange rate volatility, and ongoing tariff issues in the U.S. present challenges for the second half of the year, impacting margins.

Company Guidance

During the second quarter of 2025, Embraer reported its highest-ever quarterly revenue of $1.8 billion, with an adjusted EBIT margin of 10.5%, marking the highest level for a second quarter in the past decade. The company's backlog reached an all-time high of $29.7 billion, driven by strong demand across all business units, with deliveries up 30% year-over-year. Embraer's book-to-bill ratio was close to 2:1 over the last 12 months. In Commercial Aviation, the division recorded a backlog of $13.1 billion, supported by a 1.8:1 book-to-bill ratio. Executive Aviation achieved record second-quarter revenue of approximately $550 million and a $7.4 billion backlog, with a 2.4:1 book-to-bill ratio. The Defense & Security division ended the quarter with a $4.3 billion backlog and a 3.6:1 book-to-bill ratio, while Service & Support closed with a $4.9 billion backlog and a 2:1 book-to-bill ratio. Despite concerns over U.S. tariffs, the impact has been managed and factored into the year's forecast, presenting an upside potential should tariffs return to zero. Overall, Embraer remains confident in achieving its 2025 guidance of $7 billion to $7.5 billion in revenues, with adjusted EBIT margins between 7.5% and 8.3%, and more than $200 million in free cash flow.

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.

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.92B	6.39B	5.27B	4.54B	4.20B	3.77B
Gross Profit	1.29B	1.15B	909.60M	912.20M	655.85M	477.60M
EBITDA	1.08B	1.01B	598.20M	228.40M	479.90M	-123.30M
Net Income	376.99M	352.50M	164.00M	-185.40M	-44.70M	-731.90M
Balance Sheet
Total Assets	12.07B	11.82B	10.78B	10.14B	10.15B	10.52B
Cash, Cash Equivalents and Short-Term Investments	1.26B	2.20B	2.15B	2.31B	2.57B	2.70B
Total Debt	2.32B	2.60B	2.98B	3.27B	4.09B	4.51B
Total Liabilities	8.46B	8.48B	7.74B	7.32B	7.38B	7.61B
Stockholders Equity	3.31B	3.08B	2.79B	2.57B	2.67B	2.79B
Cash Flow
Free Cash Flow	533.07M	405.00M	186.20M	495.30M	247.10M	-1.51B
Operating Cash Flow	945.96M	871.20M	617.00M	751.30M	515.30M	-1.29B
Investing Cash Flow	-586.26M	-599.70M	-447.60M	-109.50M	-131.60M	-105.30M
Financing Cash Flow	-437.80M	-335.70M	-348.70M	-669.20M	-441.04M	1.01B

Embraer SA Technical Analysis

Technical Analysis Sentiment

Positive

Last Price56.28

Price Trends

50DMA

54.52

Positive

100DMA

50.22

Positive

200DMA

45.88

Positive

Market Momentum

MACD

1.01

Positive

RSI

54.55

Neutral

STOCH

33.21

Neutral

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 56.28 is below the 20-day moving average (MA) of 56.50, above the 50-day MA of 54.52, and above the 200-day MA of 45.88, indicating a bullish trend. The MACD of 1.01 indicates Positive momentum. The RSI at 54.55 is Neutral, neither overbought nor oversold. The STOCH value of 33.21 is Neutral, 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 (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ERJ	79 Outperform	$10.33B	27.25	12.21%	0.09%	22.95%	-1.01%
WWD	73 Outperform	$14.69B	38.75	16.76%	0.44%	5.53%	5.56%
TXT	71 Outperform	$14.20B	18.03	11.42%	0.10%	1.19%	-6.77%
DRS	68 Neutral	$10.96B	44.25	9.99%	0.66%	11.43%	32.31%
Sector *	64 Neutral	$10.71B	16.03	7.42%	2.02%	2.57%	-16.39%
BA	53 Neutral	$170.14B	―	-162.23%	―	2.41%	-193.57%
SPR	51 Neutral	$4.67B	―	81.63%	―	-2.60%	-94.76%

* Industrials Sector Average

Performance Comparison

ERJ

Embraer SA

56.93

23.28

69.18%

Boeing

230.12

55.16

31.53%

DRS

Leonardo Drs

41.19

12.98

46.01%

SPR

Spirit AeroSystems

40.94

5.79

16.47%

TXT

Textron

81.53

-8.29

-9.23%

WWD

Woodward

248.04

86.40

53.45%

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.Date of analysis: Aug 19, 2025