Why Embraer's Shares Soared Today
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Aircraft manufacturer Embraer jumped 10% today after signing a huge deal with a customer.
So what: The company announced it will make 47 E-175 jets for Republic Airways in a contract worth up to $4 billion. The company also has the option to buy another 47 aircraft, so the deal could balloon for Embraer.
Now what: The deal should keep Embraer busy and adds to a deal with Aldus Aviation for as much as $1.56 billion reported earlier this month. This can be a boom or bust business but it appears that airlines are starved for smaller aircraft in the current environment. Shares now trade at 11.6 times forward earnings estimates, a reasonable price given the big deals the company has signed this month.
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The article Why Embraer's Shares Soared Today originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool recommends Embraer. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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