Has ERJ Stock Become A Bargain After Dropping 21%?
Embraer stock has fallen by 20.5% in less than a month, from levels of $59.89 on 7/7/2025 to $47.61 now. Should you buy this dip? Dip buying is a viable strategy for quality stocks that have a history of recovering from dips.
As it turns out, Embraer passes basic quality checks and has returned (median) 14% in one year, and 20% as peak return following sharp dips (>30% in 30 days) historically.
That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
Historical Median Returns Post Dips
| Period | Past Median Return |
|---|---|
| 1M | -11.9% |
| 3M | -26.5% |
| 6M | -29.5% |
| 12M | 13.7% |
Historical Dip-Wise Details
ERJ had 2 events since 1/1/2020 where the dip threshold of -30% within 30 days was triggered
- 20% median peak return within 1 year of dip event
- 182 days is the median time to peak return after a dip event
- -45% median max drawdown within 1 year of dip event
| 30 Day Dip | ERJ Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | ERJ | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 14% | 20% | -45% | 182 | ||||
| 3152022 | -31% | -5% | 44% | 40% | -24% | 364 | ||
| 3112020 | -32% | -16% | -16% | 0% | -66% | 0 | ||
Embraer Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 21.2% | Pass |
| Revenue Growth (3-Yr Avg) | 18.3% | Pass |
| Operating Cash Flow Margin (LTM) | 15.1% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 2.2 | |
| => Cash To Interest Expense Ratio | 3.3 |
Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.