Embraer (ERJ), mcap=$1.8bn, price $10.49 vs $9.90

$ERJ pitch:
– Producer of Embraer jets and other aircraft – undervalued on every valuation metric and historical multiples.
– The core business is set to recover to mid-cycle levels over the next 1-2 years.
– A strong backlog – the highest level since 2015 – suggests several years of significant growth.
– Owns 90% of $EVEX – a recent spin-off developing electric vertical takeoff and landing vehicle with deliveries expected in 2026.
– The current ERJ market cap is 20% below the value of retained EVE ownership.

$ERJ valuation:
– Currently trades at 5.7x FY23 EBITDA vs historical range of 9x and peers at 11x.
– At 9x EBITDA would be $21 stock and adding a further $9.5/share for $EVE ownership results in a fair value of $30.5/share

Exp. gain: +200% to $30/share.

Full ERJ write-up (free guest account required):

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