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Embraer-empresa Brasileira De Aeronautica (ERJ)
NYSE:ERJ
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Embraer SA
(NYSE:ERJ)
Rating:71Outperform
Price Target:
$61.00
▲(11.25%Upside)
Positive Factors
Financial Performance
Shares of Embraer are up approximately 100% on improving operating results, sustained positive free cash flow, and a large backlog increase.
Market Expansion
Embraer secures a historic order for E2s, marking a breakthrough into a growing market for its E2 family within the small narrowbody segment.
Order Acquisition
Embraer recently secured a significant $7 billion business jet order from FlexJet, contributing to positive market sentiment.
Negative Factors
Earnings
Embraer reported 1Q25 adj. EPS of $(0.40), missing BBG $0.06.
Tariff Risks
An implied total tariff of up to $300M could still eat into profitability and/or weigh on the company's financial performance.
Embraer SA (ERJ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.05B
Dividend Yield0.09%
Average Volume (3M)1.98M
Price to Earnings (P/E)22.9
Beta (1Y)0.98
Revenue Growth22.29%
EPS Growth51.90%
CountryUS
Employees20,923
SectorIndustrials
Sector Strength89
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.40
Shares Outstanding183,658,200
10 Day Avg. Volume2,067,750
30 Day Avg. Volume1,980,318
Financial Highlights & Ratios
PEG Ratio1.94
Price to Book (P/B)3.03
Price to Sales (P/S)0.00
P/FCF Ratio19.32
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$62.00Price Target Upside13.08% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
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 makes money primarily through the sale of its aircraft and the provision of related services. The company's key revenue streams include the sale of commercial jets to airlines, executive jets to private individuals and corporations, and military aircraft to governments. Additionally, Embraer generates income through its defense and security unit, offering integrated solutions and support services. The company also earns revenue from maintenance, repair, and overhaul (MRO) services, as well as from leasing and financing solutions. Significant partnerships with global aviation leaders and suppliers contribute to Embraer's earnings by expanding its market reach and enhancing its product offerings.
Embraer SA Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 17.86%|
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 a 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
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.75
Positive
Balance Sheet
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.70
Positive
Cash Flow
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.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
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 |
| EBITDA | 1.16B | 1.01B | 598.20M | 228.40M | 479.90M | -123.30M |
| Net Income | 397.20M | 352.50M | 164.00M | -185.40M | -44.70M | -731.90M |
Balance Sheet | ||||||
| Total Assets | 11.70B | 11.82B | 10.78B | 10.14B | 10.15B | 10.52B |
| Cash, Cash Equivalents and Short-Term Investments | 1.36B | 2.20B | 2.15B | 2.31B | 2.57B | 2.70B |
| Total Debt | 2.17B | 2.60B | 2.98B | 3.27B | 4.09B | 4.51B |
| 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
Positive
54.83
Price Trends
51.11
Positive
49.08
Positive
43.89
Positive
Market Momentum
-0.74
Positive
59.10
Neutral
51.90
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 54.83 is above the 20-day moving average (MA) of 52.90, above the 50-day MA of 51.11, and above the 200-day MA of 43.89, indicating a bullish trend. The MACD of -0.74 indicates Positive momentum. The RSI at 59.10 is Neutral, neither overbought nor oversold. The STOCH value of 51.90 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
1.
We do not have a controlling shareholder and as a result we may be subject to certain risks. Q4, 2023
2.
We are subject to significant competition. Q4, 2023
3.
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 (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $12.82B | 51.85 | 9.99% | 0.42% | 11.43% | 31.92% | |
72 Outperform | $15.60B | 41.49 | 16.76% | 0.40% | 5.53% | 5.56% | |
71 Outperform | $9.05B | 22.88 | 13.36% | 0.09% | 22.29% | 51.90% | |
69 Neutral | $13.92B | 17.68 | 11.42% | 0.10% | 1.19% | -6.77% | |
60 Neutral | $4.71B | ― | 81.63% | ― | -2.91% | -109.95% | |
58 Neutral | HK$15.00B | 4.65 | -2.78% | 5.84% | 3.80% | -54.57% | |
56 Neutral | $170.47B | ― | -162.23% | ― | 2.41% | -193.57% |
* Industrials Sector Average
Performance Comparison
ERJ
Embraer SA
54.83
25.46
86.69%
BA
Boeing
225.84
47.53
26.66%
DRS
Leonardo Drs
43.24
15.65
56.72%
SPR
Spirit AeroSystems
39.82
4.54
12.87%
TXT
Textron
78.05
-12.46
-13.77%
WWD
Woodward
266.10
112.09
72.78%
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.