Brazil based commercial aircraft manufacturer and supplier Embraer SA (ERJ) recently announced its entry through a strategic venture with France based Zodiac Aerospace in Mexico. The deal was highly consistent with Embraer’s strategy of enlarging its client base and services in the international market.
Under the alliance, Embraer and Zodiac, a producer and dealer of aerospace tools, will be jointly engaged in designing and developing cabin interior essentials for the E-170 and E-190 regional aircraft through its operational unit in Mexico. Moreover, with the expectation of creating more jet interiors in the years ahead, Embraer is emphasizing improvement of its aircraft arrangement by advancing the operational facility of its biggest aircraft within 2018 and launching of the latest engines.
Of late, Embraer established several strategic partnerships to extend its businesses beyond Brazil such as in China, Portugal and the United States. The company’s latest venture which would most likely be a milestone in Embraer’s long-term operations will strengthen its foothold in the Mexican market. Moreover, it is anticipated that such strategic deals would provide more stability to the company’s investment stream ensuring future development.
Brazil-based Embraer’s product portfolio supports strong customer orders worldwide. Its diversified global footprint offers fierce competition to industry operators of the likes of Boeing Co. (BA), Erickson Air-Crane Incorporated (EAC) and Northrop Grumman Corporation (NOC).
The current Zacks Consensus Estimate for the second quarter of 2012 is 67 cents and for fiscal 2012 is $2.19. The company currently retains a Zacks #3 Rank, which translates into a short-term “Hold” rating. However, we are maintaining a long-term “Neutral” recommendation on the stock.
Zacks Investment Research