The share price of the Brazilian aircraft manufacturer
) inched up almost 1% on Friday, Oct 4 following a couple of good
news for the company. Embraer announced the sale of three of its
E195 jets to two European airlines, Belavia of Belarus and
Guernsey-based Aurigny Air Services.
In a contract with Minsk-based Belavia, Embraer would supply two
122-seat E195s under a firm purchase agreement worth $80 million.
Embraer also said Aurigny Air Services would take delivery of an
E195 next year. Aurigny Air Services mainly flies between London
Gatwick airport and Guernsey, a British dependency in the English
Channel. Under this firm order, Embraer would receive $40 million
at current list prices from the Guernsey-based Aurigny for one
The orders will be included in Embraer's 2013 third quarter
backlog and the deliveries of the first E195 are scheduled for
the second half of 2014.
Embraer is the world's third largest commercial aircraft
The Boeing Co.
) and Europe's Airbus. With rising demand, Embraer's firm order
backlog totaled $17.1 billion during the second quarter,
reflecting an increase of $3.8 billion from the sequentially
preceding quarter. It was the highest since Sep 2009.
In July, Embraer's Commercial Aviation unit entered into an
agreement, worth $2.85 billion at list prices, with International
Lease Finance Corporation ("ILFC") to deliver 50 E-Jets. The deal
has an option to extend the potential order to up to 100
aircraft. This firm order was initially announced as a Letter of
Intent at the Paris Air Show held in Jun 2013.
We believe these big-ticket deals, along with a series of
contracts and tie-ups with several companies for its jets, will
boost the performance of Embraer's commercial aircraft division.
Continuous demand for E-Jets demonstrates the confidence of its
customers, which will improve forthcoming results.
Despite these initiatives, the company continues to perform below
market expectation, falling short of the Zacks Consensus Estimate
in the last four quarters with an average earnings miss of
36.12%. Embraer SA retains a Zacks Rank #4 (Sell).
However, there are other stocks in the space that are performing
well, with a favorable Zacks Rank. These are
Lockheed Martin Corp.
Northrop Grumman Corp.
) , each with a Zacks Ranks #2 (Buy).
BOEING CO (BA): Free Stock Analysis Report
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
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