This has not been an easy year for Boeing (NYSE:BA). Not only was it dogged by safety issues related to its 787 Dreamliner, but the fiscal drama in Washington raised questions about the future of its defense business. Nonetheless, the Chicago-based has overcome these doubts and thrived.

The aerospace giant today reported better-than-expected quarterly earnings fueled by a 14% surge in deliveries. It also is speeding up production of the Dreamliner - which is attractive to airlines since it is 20% more fuel-efficient than more conventional aircrafts – and they’re also hurrying along the wide-body 777 and the single-aisle 737. The company also raised its earnings guidance for the year. Shares, not surprisingly, have hit a 52-week high.

Boeing’s results had plenty for investors to like. Free cash flow more than doubled to $2.3 billion and cash and marketable securities jumped 11% to $15.9 billion. Operating margins in Boeing’s commercial aviation unit rose to 11.6% from 9.5%. The company delivered 26 777s, up 30% from a year earlier. Its backlog is at a record $415 billion.

“Our overview of the business environment remains strongly positive,” said Chief Executive James McNerney during the company’s earnings conference call. “Airline customers continue to replace old aircraft in favor of new ones that offer compelling operating economics and increased fuel efficiency.”

Boeing expects to deliver between 635 to 645 aircraft, including about 60 787 Dreamliners, this year. Those estimates may prove to be conservative given the surge in demand for air travel. 

McNerney has managed the company through some challenging times, including the lengthy delays for Dreamliner, which cost the company billions. He hasn’t escaped unscathed. Japan Airlines, which received the second delivery of the Dreamliner, recently stunned Boeing by placing a huge order with Boeing’s rival Airbus.  

Shares of Boeing, which have surged more than 70% this year, had more room no run as Wall Street cheers the company’s better-than-expected quarterly results. Stern Agee has a $164 price target on the stock and Stifel Nicolaus’ estimate is $130 average estimate. That implies a potential upside of more than 20%. The shares are not cheap, trading at a price-to-earnings multiple of 22.4, under its 5-year high, according to Reuters. They also are more expensive than United Technologies (NYSE:UTX) (19) General Electric (NYSE:GE) (16) and Lockheed Martin (NYSE:LMT) (12).

Under McNerney, Boeing has sharply reduced costs by eliminating jobs and squeezing suppliers. Contractors that don’t play ball with Boeing are placed on “no-fly lists,” meaning that they won’t get new business from the aerospace giant. He certainly isn’t winning any popularity contests.

“I’m sounding like Darth Vader here,” McNerney was quoted by the Seattle Times as saying earlier this year.

The company’s defense business, the second largest behind Lockheed Martin, held up despite the uncertain fiscal environment. Operating margins rose to more than 9.25%. Revenue at Boeing Defense, Space and Security rose 3% to $8.05 billion. Profit, though, fell 19% to $673 million because the company is winding down production of its C-17 military transport aircraft. The business, though, captured more than $7 billion in new orders. Both Lockheed Martin and Northrop Grumman (NYSE:NOC), two of the biggest defense contractors, also reported better-than expected results.

The Bottom Line

Though no one can predict blue skies for Boeing, the company certainly has plenty going for it. This Blue Chip stock would be a good addition to investors’ portfolios. McNerney has defied the naysayers in the past and probably will do so again in the future.   

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

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