Embraer S.A. ERJ reported solid delivery figures for the fourth quarter as well as 2016, marking a record high in six years. The company has delivered 75 jets in the fourth quarter and 225 jets in 2016.

2016 Deliveries

Embraer reported commercial aviation market deliveries of 108 planes and executive aviation market deliveries of 117 in 2016. Deliveries to the executive aviation market include 73 light and 44 large executive jets. The figures were within the company’s guidance of 105–110 commercial jets, 70–80 light executive jets and 35–45 large executive jets.

On a year-over-year basis, commercial deliveries increased 6.9%, while executive aviation deliveries dipped 2.5%.

Q4 Deliveries

Total deliveries in the fourth quarter were 75, compared with 78 in the year-ago period. Deliveries in the commercial aviation and business aviation markets were a respective 32 and 43 jets in the fourth quarter, compared to 33 and 45 jets in the year-ago period. Deliveries to the executive aviation market included 25 light and 18 large executive jets.

Q4 Backlog

The company exited the fourth quarter with an order backlog of $19.6 billion, lower than the third-quarter level of $21.4 billion.

During the fourth quarter, Embraer and United Airlines announced a firm order for 24 E175 jets.  These planes are scheduled for delivery in 2017. The contract has a total value of $1.08 billion at list prices.

Long-Term Outlook

Embraer expects total market deliveries of 6,400–2,300 jets in the 70- to 90-seat segment and 4,100 units in the 90- to 130-seat segment by 2035. The 70- to 130-seat worldwide fleet in-service is anticipated to increase from 2,670 jets in 2015 to 6,690 by 2035, making it the fastest growing segment.

The Boeing Company’s BA research report projects the commercial fleet to double over the next two decades to 45,240 airplanes by the end of 2035, backed by sustained 4.8% annual growth in commercial passenger traffic. For that, the world will need 39,620 new planes, worth $5.9 trillion, between 2016 and 2035. Note that the larger commercial aircraft category is being dominated by Boeing and Airbus Group SE EADSY.

2016 Order Details of Peers

Boeing’s 2016 order details show that the company has booked 668 net commercial orders (accounting for cancellations), valued at $94.0 billion at current list prices. The order includes 550 orders for the 737, followed by 58 for the 787. On the other hand, Airbus registered net bookings of 731 aircraft, handily beating Boeing’s numbers. (Read more: Airbus 2016 Orders Beat Boeing's Again, Backlog Strong)

However, Boeing delivered a higher number of planes to its customers across the globe than Airbus. Specifically, Boeing and Airbus delivered 748 and 688 aircraft, respectively, in 2016.

Price Movement

Shares of Embraer have gained 15.9% over the last one month, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 1.2%. This could be because the company continues to witness strong demand for its E-jets.

Zacks Rank & a Key Pick

Embraer currently carries a Zacks Rank #3 (Hold). A better-ranked stocks in the same space is Lockheed Martin Corporation LMT, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lockheed’s earnings beat estimates by 26.2% in the last reported quarter. The Zacks Consensus Estimate for 2017 moved up by 1.2% in the last 60 days to $12.63.

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Embraer-Empresa Brasileira de Aeronautica (ERJ): Free Stock Analysis Report
 
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Airbus Group (EADSY): Free Stock Analysis Report
 
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