Embraer (ERJ) Weak On High Volume Today

Trade-Ideas LLC identified Embraer ( ERJ) as a weak 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 $25.0 million.
  • ERJ has traded 359,035 shares today.
  • ERJ is trading at 5.98 times the normal volume for the stock at this time of day.
  • ERJ is trading at a new low 3.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 in Brazil, North America, Latin America, the Asia Pacific, Europe, and internationally. It operates through Commercial Aviation, Executive Jets, Defense & Security, and Other Related Businesses segments. The stock currently has a dividend yield of 0.3%. ERJ has a PE ratio of 236. Currently there is 1 analyst that rates Embraer a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Embraer has been 1.1 million shares per day over the past 30 days. Embraer has a market cap of $3.9 billion and is part of the industrial goods sector and aerospace/defense industry. Shares are down 38.1% year-to-date as of the close of trading on Friday.

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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, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 24.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • EMBRAER SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EMBRAER SA reported lower earnings of $0.38 versus $1.82 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $0.38).
  • ERJ's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.23%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for EMBRAER SA is currently lower than what is desirable, coming in at 26.22%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 7.93% is above that of the industry average.

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