Embraer SA (ERJ) AI Stock Analysis

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Embraer SA

(NYSE:ERJ)

73Outperform

Embraer SA's overall stock score reflects its strong financial recovery and positive earnings call highlights, indicating robust growth and operational improvements. However, risks from U.S. tariffs and delivery issues, along with moderate overvaluation, temper the outlook.

Positive Factors

Defense Segment Growth

ERJ's defense business and its KC-390 product should be a net winner from the European pivot away from US supply.

Market Sentiment

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

Order Success

Embraer secures a historic order for E2s, marking a breakthrough into a growing market for its E2 family within the small narrowbody segment.

Negative Factors

Order Cancellation Risk

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 Risks

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

$8.80B

Dividend YieldN/A

Average Volume (3M)1.67M

Price to Earnings (P/E)22.2

Beta (1Y)1.08

Revenue Growth22.29%

EPS Growth51.90%

CountryUS

Employees20,923

SectorIndustrials

Sector Strength83

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.40

Shares Outstanding183,658,200

10 Day Avg. Volume1,298,673

30 Day Avg. Volume1,674,357

Financial Highlights & Ratios

PEG Ratio5.82

Price to Book (P/B)2.56

Price to Sales (P/S)0.00

P/FCF Ratio8.84

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$48.00

Price Target Upside-0.10% Downside

Rating ConsensusHold

Number of Analyst Covering4

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 shows strong financial recovery with improved profitability and cash flow generation. The balance sheet is stable, though reliance on debt poses some risk.

Income Statement

Positive

Embraer SA has shown a significant recovery in its financial performance with a strong revenue growth rate from 2023 to 2024. The gross profit margin and net profit margin have improved, reflecting better cost control and profitability. The EBIT and EBITDA margins are robust, indicating efficient operations. However, historical volatility in net income highlights potential risks.

Balance Sheet

Positive

The company's balance sheet reflects a stable financial position with a reasonable debt-to-equity ratio, indicating manageable leverage. Return on equity has improved significantly, suggesting better utilization of shareholder funds. However, the equity ratio suggests moderate reliance on debt financing, which could pose risks if market conditions change.

Cash Flow

Positive

Embraer SA's cash flow performance is strong, with a notable increase in free cash flow and healthy operating cash flow to net income ratio. The company has demonstrated an ability to generate cash effectively, although historical fluctuations in free cash flow growth indicate potential volatility.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
35.42B	5.27B	4.54B	4.20B	3.77B
	Gross Profit
6.38B	909.60M	912.20M	659.60M	477.60M
	EBIT
3.34B	314.50M	-110.50M	201.30M	-323.40M
	EBITDA
3.50B	583.40M	215.90M	479.90M	-123.30M
	Net Income Common Stockholders
1.92B	164.00M	-185.40M	-44.70M	-731.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
13.64B	2.15B	2.31B	2.57B	2.70B
	Total Assets
73.22B	10.78B	10.14B	10.15B	10.55B
	Total Debt
16.12B	2.98B	3.27B	4.09B	4.53B
	Net Debt
6.44B	1.35B	1.46B	2.27B	2.64B
	Total Liabilities
52.51B	7.74B	7.32B	7.38B	7.61B
	Stockholders Equity
19.05B	2.79B	2.57B	2.67B	2.83B
Cash Flow		Free Cash Flow
4.46B	186.20M	495.30M	247.10M	-1.51B
	Operating Cash Flow
5.53B	617.00M	751.30M	515.30M	-1.29B
	Investing Cash Flow
-3.21B	-447.60M	-109.50M	-131.60M	-105.30M
	Financing Cash Flow
-1.91B	-348.70M	-669.20M	-430.60M	1.01B

Embraer SA Technical Analysis

Technical Analysis Sentiment

Positive

Last Price48.05

Price Trends

50DMA

47.23

Positive

100DMA

43.63

Positive

200DMA

39.07

Positive

Market Momentum

MACD

0.76

Negative

RSI

59.08

Neutral

STOCH

77.03

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 48.05 is above the 20-day moving average (MA) of 45.35, above the 50-day MA of 47.23, and above the 200-day MA of 39.07, indicating a bullish trend. The MACD of 0.76 indicates Negative momentum. The RSI at 59.08 is Neutral, neither overbought nor oversold. The STOCH value of 77.03 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 0 New Risks

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
WWD	79 Outperform	$11.69B	31.74	16.35%	0.52%	4.96%	8.41%
TXT	77 Outperform	$13.07B	16.39	11.70%	0.11%	0.57%	-5.62%
ERJ	73 Outperform	$8.80B	22.24	13.36%	―	22.29%	51.90%
DRS	71 Outperform	$11.11B	47.91	9.50%	0.21%	13.58%	25.96%
Sector *	64 Neutral	$4.36B	12.05	5.23%	249.94%	4.13%	-10.23%
BA	52 Neutral	$149.69B	―	-162.23%	―	-9.15%	-406.76%
SPR	37 Underperform	$4.31B	―	81.63%	―	-2.91%	-109.95%

* Industrials Sector Average

Performance Comparison

ERJ

Embraer SA

48.05

21.61

81.73%

Boeing

198.53

20.09

11.26%

DRS

Leonardo Drs

40.84

18.07

79.36%

SPR

Spirit AeroSystems

36.89

6.60

21.79%

TXT

Textron

76.80

-10.99

-12.52%

WWD

Woodward

201.47

25.63

14.58%

Embraer SA Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 3.18%|

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.

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.