On Tuesday, Apple reports its results for the March quarter -- an eventful period for the company, and for the stock.
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Analysts polled by FactSet are expecting earnings of $2.36 per share on average on revenues of $57.54 billion, and will be looking for signs of a rebound from Apple's (AAPL) - Get Apple Inc. (AAPL) Report weak December quarter results, which were dragged down by sluggish iPhone sales in China. Apple shares were down 2.1% on Tuesday morning to $200.37; they are up about 27% year to date.
Here's what Apple analysts are expecting to see ahead of the company's earnings report on Tuesday after the close.
TheStreet will be live blogging Apple's March quarter earnings after the close on April 30. Please check our home page then for more details.
1. A China Rebound
Despite Apple's efforts to move away from an iPhone-centric regime and into services, iPhone sales are still Apple's bread and butter for the time being, making up the majority of its revenue. In a note last week, D.A. Davidson's Tom Forte pointed out that sales in China accounted for 19.6% of total sales in 2018, which explains why weak consumer spending there had such an outsized impact on Apple's December quarter earnings.
China remains an area of significant uncertainty for Apple, but many analysts suspect that the worst of it may be over. In addition for signs of new life in China, Forte wrote that he will be listening for "management's view on how to further counteract weakening iPhone sales and its outlook on a rebound in long-term iPhone sales."
2. Services Updates
Apple's Tuesday earnings report will be the first since its splashy launch event in late March, which teased a brand new slate of service offerings, including Apple Arcade, Apple TV+, Apple Card and Apple News+. Neither pricing nor a launch date has been announced yet for Arcade or TV+, but investors will no doubt be listening for early results on Apple News+, which launched in March, as well as for further details on the rest.
Those details will help analysts and investors re-evaluate Apple's worth: "From a valuation perspective, we continue to believe on a sum-of-the-parts [basis] that Apple's services business is worth between $400 billion to $450 billion on a standalone basis and the Street is slowly in the process of re-rating the name on this premise despite a maturing iPhone cycle," wrote Wedbush's Dan Ives in a note last week.
3. An Increased Dividend
Apple's earnings could contain one welcome reward for investors, according to CFRA Research's Angelo Zino: "We believe Apple will unveil a new $100 billion share authorization plan and increase its dividend by 10%-15% when it reports results," he wrote on Monday.
Apple's very strong balance sheet -- which included about $245 billion in cash and investments, and about $115 billion in debt as of late December 2018 -- would seemingly lend itself to a new share authorization plan. Zino set a 12-month price target of $220 on Apple shares, based on a "trough in iPhone revenue and greater traction from services/wearables supporting multiple expansion," he wrote.