Abhoy Sarkar's Avatar
published in Blogs
Dec 17, 2018

Embraer (ERJ, $21.12) To Sell 80% Commercial Aviation To Boeing (BA, $318.75)

On Monday, Embraer announced that it finalized the terms of a proposed deal to sell 80% of its commercial aviation business to Boeing Co. As of now, the Brazilian aircraft manufacturer's commercial aviation unit is valued at $5.26 billion - that’s higher than the $4.75 billion estimated when the deal was originally announced in July.

The sale could fetch Embraer around $3 billion after accounting for closing costs. The deal is still subject to shareholder approvals at both Embraer and Boeing.  Embraer's board Monday put forth the proposed deal for approval from the Brazilian government.

Additionally, Embrarer revealed plans of a joint venture with Boeing on promoting defense plane KC-390. Embraer will have 51% ownership of the operation.

Related Ticker: ERJ

ERJ in upward trend: price expected to rise as it breaks its lower Bollinger Band on May 04, 2023

ERJ may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 38 cases where ERJ's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where ERJ's RSI Indicator exited the oversold zone, of 30 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

The Momentum Indicator moved above the 0 level on May 18, 2023. You may want to consider a long position or call options on ERJ as a result. In of 81 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for ERJ just turned positive on May 17, 2023. Looking at past instances where ERJ's MACD turned positive, the stock continued to rise in of 50 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ERJ advanced for three days, in of 284 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 60 cases where ERJ's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .

ERJ moved below its 50-day moving average on May 03, 2023 date and that indicates a change from an upward trend to a downward trend.

The 10-day moving average for ERJ crossed bearishly below the 50-day moving average on May 05, 2023. This indicates that the trend has shifted lower and could be considered a sell signal. In of 14 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where ERJ declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for ERJ entered a downward trend on May 18, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. ERJ’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.058) is normal, around the industry mean (25.117). ERJ's P/E Ratio (10000.000) is considerably higher than the industry average of (311.047). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (7.856). ERJ has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.023). P/S Ratio (0.598) is also within normal values, averaging (173.523).

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. ERJ’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock worse than average.

Notable companies

The most notable companies in this group are Boeing Company (NYSE:BA), Lockheed Martin Corp (NYSE:LMT), Northrop Grumman Corp (NYSE:NOC), Spirit Aerosystems Holdings (NYSE:SPR), Virgin Galactic Holdings (NYSE:SPCE).

Industry description

Aerospace & Defense is one of largest industries in the U.S., mainly comprising the following areas: commercial airliners, military aircraft, missiles, space, and general aviation. Focused heavily on research & development, it is also one of the fastest growing industries. Military aircraft has the largest market share in the industry’s sales, followed by space systems, civil aircraft, and missiles. Aerospace exports, directly and indirectly, support more jobs than the export of any other commodity, according to a study by the U.S. Department of Commerce. Boeing Company, Lockheed Martin Corporation and General Electric Company are some of the most prominent players in this space.

Market Cap

The average market capitalization across the Aerospace & Defense Industry is 10.12B. The market cap for tickers in the group ranges from 1.66K to 136.27B. RTX holds the highest valuation in this group at 136.27B. The lowest valued company is ASDN at 1.66K.

High and low price notable news

The average weekly price growth across all stocks in the Aerospace & Defense Industry was -2%. For the same Industry, the average monthly price growth was 8%, and the average quarterly price growth was 19%. OBTEF experienced the highest price growth at 179%, while VORBQ experienced the biggest fall at -82%.

Volume

The average weekly volume growth across all stocks in the Aerospace & Defense Industry was 25%. For the same stocks of the Industry, the average monthly volume growth was 7% and the average quarterly volume growth was 157%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 49
P/E Growth Rating: 60
Price Growth Rating: 55
SMR Rating: 76
Profit Risk Rating: 77
Seasonality Score: 29 (-100 ... +100)
Related Portfolios: AEROSPACE PRODUCTS & SERVICES,AEROSPACE DEFENSE 2
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