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Aerospace and defense giant Boeing (BA - Free Boeing Stock Report) has released better-than-expected March-period financial results. For the quarter, although revenues of $18.9 billion were slightly lower than our forecast, share earnings were $1.44, besting our estimate of $1.25. Continued healthy aircraft deliveries and orders, as well as increased margins helped fuel the bottom line. After the announcement, Boeing stock was up nicely.

During the first quarter, Boeing delivered 137 commercial aircraft, which was flat compared to last year's tally. However, the operating margin widened, thanks to a better delivery mix and lower research & development expenditures. It also booked 209 net orders during the period, which brings its backlog up to more than 4,400 planes valued at $324 billion.

The Defense, Space & Security division also put in a decent showing. Although revenues declined 1%, Boeing booked a good deal of new business during the quarter. In particular, it received several contracts for its satellite and space offerings. This segment's operating margin widened by 103 basis points, thanks to a better delivery mix.

Overall, it was a good quarter for Boeing. Looking ahead, we continue to like the company's near- and long-term prospects. Although there are still economic concerns, both at home and abroad, we think that passenger air travel will continue to increase at a decent rate over the next few years. As a result, a number of domestic airlines will possess the financial flexibility and eagerness to replace their aging fleets with new aircraft. In anticipation, Boeing will likely continue to ramp up production schedules for some of its most popular models, including the 737 and 777. In our view, Boeing will also receive large orders from a few foreign carriers, and its huge backlog should support full production for many years. The situation will only improve further once the problems with the new 787 Dreamliner are worked out. We believe that this new plane will return to runways within the next few months.

For 2013, due to the first quarter outperformance, we are raising our share-net estimate by $0.10, to $5.55, which is higher than management's guidance. Note also that we have left our 2014 bottom-line estimate at $6.50, which would represent a 17% increase over our 2013 call. Looking further out, we project that Boeing's earnings will comfortably exceed $7.00 a share by the 2016-2018 period.

As for the stock, it has performed well of late. In fact, year to date, it is up 18%. In comparison, the Dow has advanced about 12% over the same timeframe. In our view, this blue chip is most suited for conservative investors. It offers a well-covered dividend and worthwhile risk-adjusted total-return potential.

That said, some risks are present. A good percentage of Boeing's revenues and earnings are derived from the U.S. military. The Defense Budget will surely continue to be a hot-button issue in contentious Washington, as many elected officials are calling for reduced defense spending. Although it is too early to tell which programs will be reduced or eliminated, we do think that Boeing will lose some business over the next few years. We continue to recommend that shareholders and prospective investors monitor the actions of Congress and the White House in regard to military expenditures.      

About The Company:The Boeing Company is a leading manufacturer of commercial jet aircraft. It also produces fighters (F-15, F/A-18), C-17 cargo carrier, V-22 helicopter, E-3 AWACS, E-4 command post, E-6 submarine communicator, ground transportation systems, develops the space station, and does work on the F-22 (ATF). In 2012, foreign sales accounted for 54% of overall revenues, and R&D amounted to 4% of sales.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.