Embraer S.A. Just Missed Earnings - But Analysts Have Updated Their Models

It's been a good week for Embraer S.A. (BVMF:EMBR3) shareholders, because the company has just released its latest yearly results, and the shares gained 7.9% to R$31.68. It was not a great result overall. While revenues of R$26b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit R$1.04 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Embraer

After the latest results, the eleven analysts covering Embraer are now predicting revenues of R$31.6b in 2024. If met, this would reflect a substantial 21% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 56% to R$1.66. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$31.3b and earnings per share (EPS) of R$1.62 in 2024. So the consensus seems to have become somewhat more optimistic on Embraer's earnings potential following these results.

The consensus price target rose 7.9% to R$28.06, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Embraer analyst has a price target of R$32.86 per share, while the most pessimistic values it at R$23.87. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Embraer's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 13% p.a. 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 9.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Embraer is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Embraer following these results. 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Embraer going out to 2026, and you can see them free on our platform here..

You can also see whether Embraer is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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.