Defense Stocks To Watch: Embraer Breaks Out, Safeguards Buy Zone

November 17, 2025 at 04:31 PM•2 min read•Matthew Galgani

Why is Embraer, a Brazilian aerospace company, suddenly a top defense stock to watch, and what does its recent financial rebound signal for the commercial aviation sector?

Key Points

1Embraer is recognized as a top defense stock alongside GE Aerospace, Howmet Aerospace, and Heico.
2The company operates in Commercial Aviation, Executive Jets, Defense and Security, and Services and Support.
3Embraer experienced a significant financial turnaround after four years of net losses.
4Earnings surged by 481% in 2024, reaching $2.51 per share.
5Sales growth has remained strong, with double-digit increases over the past seven quarters.
6Embraer stock remains within buy range, demonstrating steady market leadership.

Embraer (EMBJ), a Brazil-based aerospace company, is gaining attention as a top defense stock, alongside industry peers like GE Aerospace, Howmet Aerospace, and Heico. This recognition follows a breakout month and a place on the Investor's Business Daily Leaderboard. Embraer's diverse operations span Commercial Aviation, Executive Jets, Defense and Security, and Services and Support, with a significant footprint in the Air, Land, Sea, Space, and Cyber sectors within the defense arena. The company's market capitalization stands just above $11 billion, classifying it as a midcap play.

After enduring four consecutive years of net losses from 2018 to 2021, Embraer experienced a financial turnaround, reporting earnings of 21 cents per share in 2022 and 43 cents in 2023. Earnings surged by 481% in 2024, reaching $2.51 per share. While Wall Street anticipates a 30% profit decline this year, projections indicate a robust 58% growth in 2026. Sales growth has remained strong, with double-digit increases ranging from 16% to 32% over the past seven quarters. In the third quarter, Embraer reported an 18% revenue increase, exceeding $2 billion.

Despite not being included in the latest list of new buys by top mutual funds, Embraer has demonstrated signs of strong demand. The company holds a B+ Accumulation/Distribution Rating, and 20 funds with an A+ rating from IBD own shares. Embraer stock remains within buy range after surpassing a 62.09 buy point in a late-stage flat base. Trading above its rising 50-day line, the stock is poised to climb above its 21-day exponential moving average. The relative strength line indicates steady market leadership, remaining close to a 52-week high.

Other defense stocks, including GE and Howmet, are also trading near record highs. Heico, featured in the Breakout Stocks column on November 12, is currently working on a flat base while striving to reclaim its 50-day line. Embraer's resurgence and strong market performance highlight its potential in both the defense and commercial aviation sectors.