After staying grounded for most of 2015 and 2016, Boeing (NYSE:BA) stock broke out in 2017. Shares of the U.S. aerospace giant surged 89% higher last year, making Boeing the seventh-best stock in the S&P 500 for the year.

Boeing stock continued its rise in the first two months of 2018, but it pulled back dramatically in March because of tariff fears. Nevertheless, from a profit growth perspective, Boeing hasn't lost a step. On Wednesday morning, the company reported another quarter of strong operational performance and stellar profit growth. Boeing also raised its full-year guidance.

Q1 by the numbers

Boeing reported a solid 6.5% revenue increase in the first quarter of 2018, driven by solid growth in each of its three business units: commercial airplanes; defense, space, and security; and global services. Meanwhile, the company continued its recent trend of rapid margin expansion.

Here are some of Boeing key first-quarter performance metrics:

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$23.4 billion

$22.0 billion

6.5%

Commercial airplanes deliveries

184

169

8.9%

Core operating margin

10.7%

8.5%

N/A

Free cash flow

$2.7 billion

$1.6 billion

68%

Core EPS

$3.64

$2.17

67.7%

Total order backlog

$486 billion

$480 billion

1.3%

Data source: Boeing Q1 earnings releases. Note that some figures have been restated based on new accounting rules that went into effect for 2018.

Deliveries of commercial airplanes surged 9% to 184 last quarter. This volume increase helped drive a big improvement in the segment's profit margin, which rose to 11% from 6.7% a year earlier. This in turn lifted Boeing's companywide operating margin by 2.2 percentage points, to 10.7%.

This substantial margin improvement caused adjusted operating income to jump 35% year over year at Boeing last quarter. Furthermore, the company's effective tax rate plunged to 12.8%, compared to 26.4% in the same period of 2017, due to the benefit of U.S. corporate tax reform. (This is slightly below its estimated full-year effective tax rate of 16%.) The combination of strong operating income growth and a lower tax rate caused core earnings per share to surge 68%, reaching $3.64.

Boeing's cash flow momentum also continued last quarter. Free cash flow rose 68% to $2.7 billion, helping to fund $1 billion of dividends and $3 billion of share repurchases during the first quarter.

Production is ramping up

The biggest tailwind driving Boeing's earnings and cash-flow growth is rising production in its commercial airplanes division. This tailwind is set to continue in the next few years.

A rendering of a Boeing 737 MAX 8 in flight

Boeing is in the midst of dramatically increasing its commercial airplane production. Image source: Boeing.

Indeed, Boeing delivered just 132 of its workhorse 737 jets last quarter -- an average of 44 per month -- compared to its planned production rate of 47 per month. The main cause of the discrepancy is that engine supplier CFM fell short of its production target by 70 engines last quarter. It expects to catch up in the next six months or so. This will allow Boeing to ramp up 737 output to 57 per month by the end of 2019. It is even considering additional production increases in the early 2020s.

Boeing will also boost output of some of its widebody models in the next few years. Production of the 787 Dreamliner is set to rise from 12 per month to 14 per month next year, supported by strong order activity. Furthermore, Boeing stated in the earnings report that it will increase 767 production to three per month in 2020. (For comparison, it delivered just four in the entire first quarter.) Lastly, 777 production was cut dramatically last year, but it is likely to bounce back after the introduction of the next-generation 777X in 2020.

Full-year guidance moves higher

Boeing has a track record of low-balling its forecast at the beginning of each year and then raising it during the year. True to form, the company boosted its EPS guidance by $0.50 on Wednesday. Core EPS is now expected to reach $14.30 to $14.50 this year, up from Boeing's restated 2017 core EPS (adjusted for tax reform) of $12.33.

Boeing also raised its cash flow forecast modestly. It now expects to generate $15.0 billion to $15.5 billion of operating cash flow this year, whereas its original guidance called for operating cash flow of about $15 billion.

In short, Boeing is off to a great start in 2018. As long as it doesn't get caught up in a full-blown trade war, the company should be able to continue posting strong EPS growth for the next few years.

Adam Levine-Weinberg has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.