At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

The word in the air
Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) isn't the only fan of Brazilian plane maker Embraer (NYSE: ERJ) these days. Now even the analysts are taking a shine to it.

This morning, we learned that the smart folks at Bank of America/Merrill Lynch upgraded Embraer shares. Of course, it wasn't so long ago (yesterday, to be precise) that these same analysts told us to sell Embraer.

So what changed?

One word: Profits
Last week, Embraer announced staggering numbers. It racked up $1 billion in quarterly sales, and a gross margin of 22.1% on those sales -- 330 basis points higher than last year, and the third straight quarter of 20%-plus profits. On the bottom line, those profits totaled $98.5 million, versus the $55.4 million that Wall Street expected -- with a promise of more to come.

With backlog holding steady at $15.3 billion, Embraer has enough business waiting on the tarmac to keep its manufacturing lines humming for three years straight, without booking a single new sale. And with improved efficiency of operation, the company is now promising to generate an 8.75% operating margin this year -- 150 basis points higher than previously projected. For comparison, that's better profitability than Northrop Grumman (NYSE: NOC) or Boeing (NYSE: BA) can boast. But is this reason enough to buy Embraer today?

Let's go to the tape
B of A certainly thinks so. Sadly, we can no longer tell you with any confidence whether B of A knows what it's talking about. Ever since it swallowed Merrill Lynch whole, the company's played the wallflower and stopped releasing its ratings data through for tracking. (Maybe it's afraid of being held accountable for its advice ... or maybe it's just shy.)

I can tell you that from the numbers I'm seeing, B of A appears to have made a mistake today. Over the past 12 months. Embraer has racked up $302 million in GAAP profits, and converted about $278 million of that into free cash flow. That gives the stock a P/E ratio of 17.6, and a price-to-free cash flow ratio of 19.5.

These numbers don't look especially attractive in light of consensus predictions for 10% earnings growth next year, nor even for estimates of 15% growth between now and 2013. In the longer term, as the U.S. dollar continues to shrink and U.S. goods become increasingly price-competitive, analysts predict we'll see Embraer's earnings stagnate, with five-year growth expected to average just 2% per year.

None of which bodes well for Embraer.

A smarter alternative
That said, there are ways to play this morning's upgrade that mitigate the risk of investing in an overpriced plane maker. In the short term, at least, Embraer's sales are expected to grow, in part because of Buffett's huge 125-plane purchase. And this does suggest a few avenues to profit.

According to, my go-to source for all things plane-parts, Embraer does a lot of its parts-buying right here in the U.S. of A. The medium-range Embraer 190 passenger jet, for example, boasts engines from General Electric (NYSE: GE), hydraulics from Parker Hannifin (NYSE: PH), and cabin A/C from United Technologies (NYSE: UTX) -- each of which should benefit from any near-term surge at Embraer.

If, as I believe likely, a weaker U.S. dollar makes buying parts Stateside an attractive value proposition for foreign buyers such as Embraer, this could be very good news indeed for U.S. investors -- whether Embraer itself flies high or crashes and burns.