Here's everything to watch for in Apple earnings today

Key Points
  • Analysts expect earnings of $2.02 a share on revenue of $52.97 billion, according to Thomson Reuters consensus
  • iPhone unit sales expected to hit 52 million (according to FactSet)
  • Faith in the next iPhone, growth in services revenue, guidance, and repatriation of cash all in focus
Shares in Apple hit all-time high ahead of earnings release
Shares in Apple hit all-time high ahead of earnings release

Apple is set to report earnings after the bell on Tuesday — and analysts will watch for whether consumers are buying more iPhones than last year, even with a much hyped new model on the horizon.

Here's what analysts expect Apple to report

Here are consensus estimates, according to Thomson Reuters:

  • Adjusted EPS: $2.02 a share
  • Revenue: $52.97 billion
  • iPhone unit sales: 52 million (according to FactSet)
Tim Cook, CEO of Apple
Source: Apple

On iPhone unit numbers, 'investors need faith'

Apple makes most of its money from iPhones — and even if it meets estimates of 52 million, that's not a lot more than the 51 million it reported a year ago.

Meanwhile, smartphone buying intent has hit a nine-year low, according to a survey of 4,075 North American consumers conducted by 451 Research and cited by UBS.

To make more money, Apple will either need to outsell Wall Street's estimates or, as Cowen's Timothy Arcuri suggests, sell more expensive phones.

Beyond that, UBS' Steven Milunovich suggests, Apple investors will just need to believe as reports predict the next iPhone could be game-changing.

"Investors need faith that users are waiting rather than switching," Milunovich wrote in a research note on Monday. He added: "Most of the pullback in smartphone demand appears to be Apple users deferring upgrades. Less demand now could mean more later as long as the retention rate remains high."

Despite skittishness around consumer buying, analysts expect Apple to forecast revenue of about $45.59 billion for the June quarter, according to Thomson Reuters, up 7.6 percent from a year ago.

Services are becoming 'really key for Apple' 

Apple has been gradually grooming a new revenue source: software and services, which has posted double-digit growth the past few quarters.

"I'd expect that the software and services revenue will continue to grow significantly," Forrester analyst Thomas Husson said in a statement. "This is really key for Apple and a unique way for the company to monetize its huge installed base. Content, services and payments offer new opportunities to generate recurring revenues and create loyalty to the Apple ecosystem."

Analyst: Apple shares should continue to work higher
Analyst: Apple shares should continue to work higher

But with the delay of original content like "Carpool Karaoke," eyes may turn to the company's annual developer conference in June.

"It will be particularly interesting to see how Apple combines new technologies like AR, facial and image recognition, and sensors to let consumers sense the world around them," Husson said of Apple's Worldwide Developer Conference.

A quarter-trillion-dollar cash pile ... and lesser numbers to watch

One figure that has analysts excited is Apple's pile of cash — which hit a record $246 billion last quarter and is only expected to grow.

"Apple has been using its cash, but it's like when you're draining the bathtub but the faucet's running faster than the bath can drain," Jason Ware, CIO of Albion Financial, told CNBC's "Power Lunch" on Monday. "There's a huge number of opportunities out there for Apple that we, as shareholders, hope Apple capitalizes on."

While its sheer size is impressive, it's also particularly important given that the new U.S. presidential administration is angling to let companies bring back foreign-held cash at a discount.

That could give Apple an opportunity to beef up its services business further through expanding its content library, said Amit Daryanani, an analyst at RBC Capital Markets.

"To do a mega deal, like [buying] Disney, certainly getting the cash back in the U.S. would be a nice positive," Daryanani told "Power Lunch" on Monday. "Now listen, there's reason to believe that the reason that Apple hasn't done a deal in the past few years isn't because they don't have the money, but because they believe their old strategy works into content."

To that end, Apple's tax expectations will be in focus. In January, the tech giant forecast a tax rate of 26 percent for the March quarter.

Looking ahead

Former Apple analyst turned VC Gene Munster wrote that Apple's earnings likely a "non-event," as investors focus on what the future holds for the next iPhone, which Munster calls the iPhone X.

"There appears to be little risk from the Mar-17 results or Jun-17 guidance that would change iPhone X anticipation," Munster said. "Fast forwarding to the fall, shares are setting up to enter a range-bound period as investors playing the iPhone X trade will likely unwind positions."

But least one part of Apple's guidance, its gross margins, might be of note, RBC's Daryanani said. The company said in January it expects gross margin between 38 and 39 percent for the March quarter.

Apple's expected to earn about $8.95 per share this fiscal year, which ends in September, and about $10.29 per share next fiscal year, according to Thomson Reuters consensus estimates. But if the company posts more profit from each phone, that could go higher, Daryanani said.

Options Action: Bet on Apple?
Options Action: Bet on Apple?

"One number to watch that could impede the stock performance is ... what's happened to the gross margin trend," Daryanani said. "There's a belief — and I think it's right — that with iPhone 8, Apple could get $11, $12 of earnings over the next 12 months."

Other than selling pricier phones, Apple has tried to squeeze more profit from its handsets through pressuring suppliers to lower prices.

Apple has insourced some chip design, sending shares of supplier Imagination Technologies about 60 percent lower year to date. And Qualcomm has had to trim its guidance for future quarters, as Apple's contract manufacturers threaten to underpay amid a $1 billion lawsuit between the two tech giants.

Commentary around Qualcomm's tiff with Apple was nearly the entire focus of Qualcomm's earnings conference call with analysts — but the fight could also be perceived as trouble ahead for Apple, writes Vijay Rakesh, senior analyst at Mizuho.

"Apple withholding payments while shipping iPhones .... might be a risky maneuver into a marquee launch, as QCOM could, with its back against a wall, push for an injunction on shipping iPhones — not a positive outcome for the supply chain," Rakesh wrote in a research note on Monday.

The Chinese market has been another question mark for Apple in recent years, although Chief Executive Tim Cook has assured investors he's very bullish on the Asian nation longer term.

"While competition was tougher in Q2 with companies like Huawei, Oppo and Vivo in the highly competitive Chinese market, Apple maintained a good dynamic throughout the quarter," Forrester's Husson said.