Trade-Ideas LLC identified

Embraer

(

ERJ

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Embraer as such a stock due to the following factors:

  • ERJ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.5 million.
  • ERJ has traded 130,939 shares today.
  • ERJ is trading at 3.59 times the normal volume for the stock at this time of day.
  • ERJ is trading at a new high 5.09% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ERJ:

Embraer S.A. designs, develops, manufactures, and sells aircraft and systems; and provides technical support and after-sales service in Brazil, North America, Latin America, the Asia Pacific, Europe, and internationally. The stock currently has a dividend yield of 0.5%. ERJ has a PE ratio of 15. Currently there are 5 analysts that rate Embraer a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Embraer has been 947,600 shares per day over the past 30 days. Embraer has a market cap of $5.0 billion and is part of the industrial goods sector and aerospace/defense industry. Shares are down 10.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Embraer as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • ERJ's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 472.93% to $124.90 million when compared to the same quarter last year. In addition, EMBRAER SA has also vastly surpassed the industry average cash flow growth rate of 19.94%.
  • Even though the current debt-to-equity ratio is 1.03, it is still below the industry average, suggesting that this level of debt is acceptable within the Aerospace & Defense industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.19 is sturdy.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, EMBRAER SA's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for EMBRAER SA is rather low; currently it is at 23.21%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.53% is significantly below that of the industry average.

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