EMBRAER SA-SPON ADR (ERJ) Stock Fundamental Analysis
NYSE:ERJ - New York Stock Exchange, Inc. - US29082A1079 - ADR - Currency: USD
We assign a fundamental rating of 5 out of 10 to ERJ. ERJ was compared to 64 industry peers in the Aerospace & Defense industry. While ERJ is still in line with the averages on profitability rating, there are concerns on its financial health. ERJ is not priced too expensively while it is growing strongly. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
In the past year ERJ was profitable.
ERJ had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: ERJ reported negative net income in multiple years.
Of the past 5 years ERJ 4 years had a positive operating cash flow.
1.2 Ratios
With a Return On Assets value of 2.62%, ERJ perfoms like the industry average, outperforming 51.56% of the companies in the same industry.
With a decent Return On Equity value of 10.08%, ERJ is doing good in the industry, outperforming 70.31% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 4.77%, ERJ is in line with its industry, outperforming 50.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ERJ is below the industry average of 7.79%.
The 3 year average ROIC (3.04%) for ERJ is below the current ROIC(4.77%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.62% | ||
| ROE | 10.08% | ||
| ROIC | 4.77% |
ROA(3y)0.77%
ROA(5y)-0.96%
ROE(3y)2.92%
ROE(5y)-3.58%
ROIC(3y)3.04%
ROIC(5y)N/A
1.3 Margins
With a Profit Margin value of 5.42%, ERJ perfoms like the industry average, outperforming 57.81% of the companies in the same industry.
With a decent Operating Margin value of 9.98%, ERJ is doing good in the industry, outperforming 65.63% of the companies in the same industry.
In the last couple of years the Operating Margin of ERJ has grown nicely.
With a Gross Margin value of 17.93%, ERJ is not doing good in the industry: 70.31% of the companies in the same industry are doing better.
In the last couple of years the Gross Margin of ERJ has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.98% | ||
| PM (TTM) | 5.42% | ||
| GM | 17.93% |
OM growth 3Y26.36%
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y5.14%
GM growth 5Y4.37%
2. Health
2.1 Basic Checks
ERJ has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for ERJ remains at a similar level compared to 1 year ago.
Compared to 5 years ago, ERJ has about the same amount of shares outstanding.
ERJ has a better debt/assets ratio than last year.
2.2 Solvency
ERJ has an Altman-Z score of 1.38. This is a bad value and indicates that ERJ is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of ERJ (1.38) is worse than 76.56% of its industry peers.
ERJ has a debt to FCF ratio of 5.34. This is a neutral value as ERJ would need 5.34 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 5.34, ERJ is doing good in the industry, outperforming 76.56% of the companies in the same industry.
A Debt/Equity ratio of 0.80 indicates that ERJ is somewhat dependend on debt financing.
ERJ's Debt to Equity ratio of 0.80 is on the low side compared to the rest of the industry. ERJ is outperformed by 67.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 5.34 | ||
| Altman-Z | 1.38 |
ROIC/WACC0.28
WACC17%
2.3 Liquidity
A Current Ratio of 1.47 indicates that ERJ should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.47, ERJ is doing worse than 68.75% of the companies in the same industry.
ERJ has a Quick Ratio of 1.47. This is a bad value and indicates that ERJ is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.81, ERJ is not doing good in the industry: 79.69% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.47 | ||
| Quick Ratio | 0.81 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 566.25% over the past year.
Looking at the last year, ERJ shows a very strong growth in Revenue. The Revenue has grown by 35.67%.
Measured over the past years, ERJ shows a quite strong growth in Revenue. The Revenue has been growing by 10.19% on average per year.
EPS 1Y (TTM)566.25%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%128.57%
Revenue 1Y (TTM)35.67%
Revenue growth 3Y16.04%
Revenue growth 5Y10.19%
Sales Q2Q%17.03%
3.2 Future
The Earnings Per Share is expected to grow by 17.65% on average over the next years. This is quite good.
Based on estimates for the next years, ERJ will show a very strong growth in Revenue. The Revenue will grow by 69.16% on average per year.
EPS Next Y101.3%
EPS Next 2Y67.61%
EPS Next 3Y17.65%
EPS Next 5YN/A
Revenue Next Year16.9%
Revenue Next 2Y14.8%
Revenue Next 3Y98.54%
Revenue Next 5Y69.16%
3.3 Evolution
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 101.30, ERJ can be considered very expensive at the moment.
ERJ's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of ERJ to the average of the S&P500 Index (28.29), we can say ERJ is valued expensively.
A Price/Forward Earnings ratio of 50.26 indicates a quite expensive valuation of ERJ.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERJ is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 21.08. ERJ is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 101.3 | ||
| Fwd PE | 50.26 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ERJ indicates a rather cheap valuation: ERJ is cheaper than 93.75% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ERJ is valued cheaply inside the industry as 96.88% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.59 | ||
| EV/EBITDA | 9.36 |
4.3 Compensation for Growth
ERJ's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
A more expensive valuation may be justified as ERJ's earnings are expected to grow with 17.65% in the coming years.
PEG (NY)1
PEG (5Y)N/A
EPS Next 2Y67.61%
EPS Next 3Y17.65%
5. Dividend
5.1 Amount
With a yearly dividend of 0.11%, ERJ is not a good candidate for dividend investing.
ERJ's Dividend Yield is a higher than the industry average which is at 1.39.
Compared to an average S&P500 Dividend Yield of 2.52, ERJ's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.11% |
5.2 History
ERJ has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
DP0%
EPS Next 2Y67.61%
EPS Next 3Y17.65%
43.56
+1 (+2.35%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners47.87%
Inst Owner Change0%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap8.00B
Analysts77.14
Price Target45.37 (4.16%)
Short Float %2.86%
Short Ratio3.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.11% |
Yearly Dividend0
Dividend Growth(5Y)N/A
DP0%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-13.87%
Min EPS beat(2)-31.01%
Max EPS beat(2)3.26%
EPS beat(4)2
Avg EPS beat(4)5.95%
Min EPS beat(4)-31.01%
Max EPS beat(4)73.93%
EPS beat(8)2
Avg EPS beat(8)-23.39%
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)1.29%
Min Revenue beat(2)-1.3%
Max Revenue beat(2)3.89%
Revenue beat(4)2
Avg Revenue beat(4)0.79%
Min Revenue beat(4)-1.3%
Max Revenue beat(4)3.89%
Revenue beat(8)2
Avg Revenue beat(8)-5.5%
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)-3.81%
PT rev (3m)21.06%
EPS NQ rev (1m)0%
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)140.13%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 101.3 | ||
| Fwd PE | 50.26 | ||
| P/S | 1.33 | ||
| P/FCF | 15.59 | ||
| P/OCF | 8.5 | ||
| P/B | 2.47 | ||
| P/tB | 13.27 | ||
| EV/EBITDA | 9.36 |
EPS(TTM)0.43
EY0.99%
EPS(NY)0.87
Fwd EY1.99%
FCF(TTM)2.79
FCFY6.42%
OCF(TTM)5.12
OCFY11.76%
SpS32.8
BVpS17.63
TBVpS3.28
PEG (NY)1
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.62% | ||
| ROE | 10.08% | ||
| ROCE | 7.71% | ||
| ROIC | 4.77% | ||
| ROICexc | 6.79% | ||
| ROICexgc | 13.08% | ||
| OM | 9.98% | ||
| PM (TTM) | 5.42% | ||
| GM | 17.93% | ||
| FCFM | 8.52% |
ROA(3y)0.77%
ROA(5y)-0.96%
ROE(3y)2.92%
ROE(5y)-3.58%
ROIC(3y)3.04%
ROIC(5y)N/A
ROICexc(3y)4.39%
ROICexc(5y)N/A
ROICexgc(3y)8.44%
ROICexgc(5y)N/A
ROCE(3y)4.92%
ROCE(5y)N/A
ROICexcg growth 3Y38.8%
ROICexcg growth 5YN/A
ROICexc growth 3Y37.44%
ROICexc growth 5YN/A
OM growth 3Y26.36%
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y5.14%
GM growth 5Y4.37%
F-Score6
Asset Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 5.34 | ||
| Debt/EBITDA | 3.14 | ||
| Cap/Depr | 188.75% | ||
| Cap/Sales | 7.1% | ||
| Interest Coverage | 3.8 | ||
| Cash Conversion | 113.65% | ||
| Profit Quality | 157.31% | ||
| Current Ratio | 1.47 | ||
| Quick Ratio | 0.81 | ||
| Altman-Z | 1.38 |
F-Score6
WACC17%
ROIC/WACC0.28
Cap/Depr(3y)162.83%
Cap/Depr(5y)138.44%
Cap/Sales(3y)6.98%
Cap/Sales(5y)6.64%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)566.25%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%128.57%
EPS Next Y101.3%
EPS Next 2Y67.61%
EPS Next 3Y17.65%
EPS Next 5YN/A
Revenue 1Y (TTM)35.67%
Revenue growth 3Y16.04%
Revenue growth 5Y10.19%
Sales Q2Q%17.03%
Revenue Next Year16.9%
Revenue Next 2Y14.8%
Revenue Next 3Y98.54%
Revenue Next 5Y69.16%
EBIT growth 1Y178.29%
EBIT growth 3Y46.63%
EBIT growth 5YN/A
EBIT Next Year52.38%
EBIT Next 3Y31.81%
EBIT Next 5Y79.84%
FCF growth 1Y340.97%
FCF growth 3Y29.27%
FCF growth 5Y15.04%
OCF growth 1Y95.69%
OCF growth 3Y24.7%
OCF growth 5Y8.09%