Earnings Beat: Embraer S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Embraer S.A. (BVMF:EMBR3) just released its latest second-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.1% to hit R$8.3b. Embraer also reported a statutory profit of R$0.75, which was an impressive 146% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Embraer

Following the latest results, Embraer's 15 analysts are now forecasting revenues of R$34.2b in 2024. This would be a huge 21% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to climb 13% to R$2.95. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$34.2b and earnings per share (EPS) of R$2.10 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the very substantial lift in earnings per share expectations following these results.

There's been no major changes to the consensus price target of R$43.77, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Embraer, with the most bullish analyst valuing it at R$58.04 and the most bearish at R$35.24 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Embraer's growth to accelerate, with the forecast 46% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Embraer to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Embraer's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Embraer analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Embraer that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.