Photo source: Boeing.

Investors would like to think the market is efficient at judging stocks, but we all know better. Sometimes irrational sell-offs happen, and sometimes the opposite takes place. Zeroing in on aviation juggernaut Boeing (NYSE:BA), the company recorded a staggering net earnings and earnings-per-share growth of 52% and 59%, respectively, compared to last year's second quarter. It's not number fudging either, those are GAAP numbers! Further, management raised full year earnings guidance, which is always well received; yet, Boeing was the Dow index's biggest loser yesterday. What gives?

More to the story
Now, while those earning figures certainly look impressive, we have to consider the effects of Boeing's tax benefits in the second quarter. Those favorable benefits check in at $116 million, for the 2007-2008 tax settlement, as well as an additional $408 million benefit. 

Put another way, those combined tax benefits added roughly $0.71 earnings per share. Without those tax benefits, doing the math, it puts Boeing's second-quarter GAAP earnings per share at $1.53; that's still an 8.5% gain over last year's second-quarter earnings per share, but a far cry from the reported 59% hike.

Furthermore, generally when management raises guidance for the full year, it's very well received. This time, though, Boeing's $0.75 increase for its core earnings per share to reach between $7.90 and $8.10 this year was essentially just adjusting for the unannounced $408 tax benefit.

While those tax benefits weren't necessarily bad, there were a few disappointing factors to discuss before we get to the upshot for Boeing.

Not again?
One problem investors had with Boeing's second quarter was a $272 million after-tax charge for the cost of additional engineering and systems work for its KC-46A Tanker program. This had a negative impact on overall earnings, and it especially hurt Boeing's defense segment's operating margin.

The $272 million charge negatively affected earnings per share by $0.37 and it sent defense, space, and security operating margins 240 basis points lower.

The problem for some investors is that this charge is happening in such an early stage of a long-term program. It could bring back painful memories for investors that witnessed the 787 Dreamliner's multiple cost overruns and production delays.

Now, with those explanations out of the way, there really were quite a few positive takeaways in Boeing's second quarter.

787 Dreamliner in final assembly. Source: Boeing.

The upshot
Perhaps the most important aspect for investors going forward is Boeing's accelerated production. Despite rumors that the 787 Dreamliner was having troubles maintaining production, Boeing delivered 30 787 airplanes in the second quarter. Also, deliveries of the 737 increased 7% compared to last year's second quarter, up to 124 airplanes delivered -- a pace of just over 41 airplanes per month.

It was a record delivery month for both Boeing's 787 and 737, which helped push total deliveries to 181 in the second quarter. Furthermore, management is still confident it will set record deliveries for the full year between 715-725 aircraft.

Another positive development that won't show up until next quarter, was the $40.2 billion on orders Boeing won at the Farnborough airshow last week. For the second quarter, Boeing's total backlog remained at $440 billion, which is still massive and very valuable, and that appears set to balloon again in the third quarter.

Bottom line
Demand for commercial aircraft is still outweighing the decline in Boeing's defense business, and that doesn't look to change anytime soon. Because fuel costs, in comparison to airliners' overall cost, keep rising more and more replacement demand is coming to Boeing's doorstep. Boeing's cutting edge and fuel efficient aircraft represent a faster return on investment for airliners, which is a huge selling point on these expensive airplane purchases.

As the Chicago-based company continues to accelerate its aircraft production rates to new heights, and continues to return value to shareholders through increasing dividends and share buybacks, it is well positioned to beat the market over the next 10 years.