Embraer, the Brazilian aerospace manufacturer, is the IBD Stock Of The Day for Tuesday. Its 60% run since the start of the year includes multiple breakouts, and it is actionable again as it trends toward its all-time high.
Embraer produces a fleet of commercial, business and defense jets. On the commercial front, Embraer is best-known for its Embraer 175 (E175) single-aisle planes. It also manufacturers the C-390 military transport aircraft. The company's Phenom 300 has been the world's bestselling light jet for the past 12 years, according to a May announcement.
Embraer suffered four straight years of net losses from 2018 to 2021 before reviving its earnings growth in 2022 and 2023.
Embraer Profit Growth Rose Last 4 Quarters
In 2022, Embraer posted earnings of 21 cents per share, which accelerated to 43 cents per share in 2023. Meanwhile, Embraer's earnings accelerated over the last four quarters, from an 18% decline in Q1 last year to an 86% jump for its first-quarter report on May 7.
For Q1, Embraer reported a loss of 7 cents per share adjusted, up from a 48-cent loss a year ago. Revenue leapt 25% to $896.6 million.
The company's deliveries soared 67% for Q1 while its overall backlog jumped 13% quarter over quarter to $21.1 billion, marking Embraer's highest backlog level over the past seven years. SkyWest as of Q1 was Embraer's largest customer for its E175 commercial jets, with 228 jets on order. SkyWest is waiting on 21 E-175 deliveries as of quarter-end.
American Airlines, the second-largest E-175 customer, is waiting on 101 deliveries after ordering 204 jets.
Meanwhile, Embraer in May also maintained its 2024 delivery guidance. For the year, Embraer expects to deliver 72 to 80 commercial aircraft and 125 to 135 of its executive business jets.
Analysts predict 2024 earnings will spike 356% to $1.98 per share. FactSet projects full-year revenue will increase 18% to $6.23 billion.
Embraer also founded Eve Air Mobility as a spinout of its Embraer-X incubator in 2017. Eve Air Mobility is an independent company that produces electric vertical takeoff and landing (eVTOL) aircraft for urban environments.
ERJ Stock
Embraer trades in American depositary receipts (ADRs) under the ticker ERJ.
Shares are actionable as they reverse off their 21-day exponential moving average and clear an early entry at their June 7 high of 29.44.
The stock recently rebounded, after pulling back to test the highs of its prior six-week flat base. It is in the fourth week of a possible new base pattern.
The aircraft maker rallied 6o% so far this year, and pulled back from a record high 31.12 on May 12.
Embraer has a perfect 99 Composite Rating. The Composite Rating combines various fundamental and technical indicators into one easy-to-read score. ERJ stock has a 73 EPS Rating due to its recent accelerating earnings growth. Embraer's relative strength line is swinging back toward mid-May highs and it has a 96 RS Rating.
Embraer is on the IBD Leaderboard Leaders List
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
