Embraer (ERJ) Supplies Enhanced E-99M Jet to Brazilian Air Force
Embraer S.A. ERJ recently supplied its fifth EMB 145 Airborne Early Warning and Control (“AEW&C”) aircraft, designated as E-99M now, to the Brazilian Air Force. This is an improved version of aircraft that will enable the Brazilian Air Force to perform AEW&C functions. The E-99M can also be used in intelligence, surveillance and airborne reconnaissance missions.
Most likely, Embraer has made this enhanced aircraft to cater to continually evolving security threats worldwide, thereby boosting the need for technologically advanced jets to perform airspace surveillance.
Significance of E-99M
The E-99 jet is capable of detecting, tracking and identifying targets in its coverage zone and transmitting the information via Data Link. The aircraft conducts airspace surveillance, interception control and management, electronic intelligence and border monitoring missions.
The E-99M aircraft now features updated Erieye Radar and Command & Control (C2) systems and new Electronic Warfare (Non-Communication - NCOM) systems, a new IFF Transponder, seven software-defined V/UHF radios, a new Mission Audio system with VoIP technology, and a new Mission Audio and Data recorder, as well as a Data Link function adapted to a new architecture.
Such enhanced features will allow Embraer to attract more customers and lock in more order inflows, like the latest one. This is likely to bolster its revenue generation prospects.
Growth Prospects
The ever-changing military dynamics have necessitated the need to include technologically advanced military jets, arms and ammunition. In such a scenario, Embraer’s move to enhance its EMB 145 AEW&C aircraft could prove prudent.
As nations are ramping up their defense spending to strengthen their arsenals, the prospects for military aircraft have bolstered manifold, with combat jets playing a key role in defending a country’s safety. Per the report from the Coherent Market Insights firm, the global military aircraft market is poised to witness a CAGR of 5.4% between 2022 and 2030. This unfolds immense opportunities for companies like Embraer that have exposure in the military aircraft market.
Apart from Embraer, aircraft manufacturers that have an established position in the military aircraft market and may gain from the flourishing growth opportunities offered by this market are as follows:
Lockheed Martin LMT: Lockheed Martin designs and manufactures the most agile and effective fighter aircraft. Its product portfolio includes the C-130J Super Hercules, F-16 Fighting Falcon, F-35 Lightning II fighter aircraft, etc.
Lockheed boasts a long-term earnings growth rate of 8.6%. Its shares have returned 1.7% to its investors in the past six months.
Airbus EADSY: Airbus’ military aircraft consists of the A400M, the C295 tactical transporter, the new-generation A330 Multi-Role Tanker Transport and the Eurofighter, the most advanced swing-role fighter ever conceived.
Airbus’ long-term earnings growth rate is pegged at 12.4%. Shares of EADSY have returned 23.8% value to its investors in the past year.
Textron TXT: Textron’s military aircraft include the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light-attack aircraft. The company also manufactures the Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft and the T-1A jet trainer.
Textron boasts a long-term earnings growth rate of 11.7%. TXT stock has appreciated 9.1% in the past year.
Price Movement
In the past year, shares of Embraer have rallied 54.2% against the industry’s decline of 11.4%.
Image Source: Zacks Investment Research
Zacks Rank
Embraer currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report
Textron Inc. (TXT) : Free Stock Analysis Report
Airbus Group (EADSY) : Free Stock Analysis Report
