Apple Earnings: What Shareholders Will Watch For in Report

Apple analysts and shareholders are prepared for the worst this quarter, but some see a rebound on the horizon.

Before Apple's second quarter earnings Tuesday, analysts and shareholders told "Squawk on the Street" what numbers they are looking for in the company's quarterly report.

Analysts Looking For New Products, Cash Strategy

While Apple is attractive for value investors, growth investors are still on the sidelines, said Abhey Lamba, senior equity research analyst at Mizuho Securities. Lamba has a buy rating on Apple and a $550 price target, which was recently lowered from $575.

Lamba's firm expects Apple's upcoming earnings to be slightly below consensus primarily due to weaker iPhone shipments, adding in a research note that "meaningful dividend growth and increased share buybacks are overdue."

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The most important metric in the earnings release, he said, will be iPhone sales for the quarter, Lamba said, expecting between 30-32 million units sold. Guidance is another important item to look for, he said, and he expects it to be "significantly below consensus," around $35 billion for revenues and $7.75-8.25 range for earnings per share.

The company is expected to report earnings of $10.12 per share on revenue of $42.6 billion, according to a poll by Thomson Reuters.

"We're not expecting (new products) this year," he added. "For value investors it's important for the company to leverage its balance sheet to return more cash to shareholders and be more aggressive on buybacks. For now, they need to embrace value investors until they can prove that they can create new product categories. That's when growth investors will come."

Tavis McCourt, Raymond James managing director and senior analyst, is a little more bullish on Apple, with a buy rating and a price target of $600.

"Even though I don't expect a great June, maybe the markets have overreacted on near-term negative trends," he said.

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McCourt said he expects 36 million iPhone sales for the second quarter, with the number dropping to 24 million in June and recovering to 40 million by the end of the year, driven by the launch of the iPhone 5S.

With many looking for clarity on Apple's cash distribution strategy, McCourt has low expectations that this quarter's report will give investors what they're looking for.

"Let's not lose track of the fact that Apple already pays out about all of its U.S. cash flow in a dividend or a buyback," he said. "It wouldn't shock me if sometime before the fiscal year end that we see a little more of an aggressive buyback."

What is really important, he said, was whether the subscriber base is still growing, whether the new iPhone created new upgrades, whether an iTV is on the way or new form factors were on the way for the iPhone, such as a larger screen.

"You really only need about one of those things to go modestly OK for this stock to work from here," he said.

Shareholders Maintain Long-Term View

"This is a very cheap stock by any metric unless you absolutely believe that earnings are going to decline 20 percent a year, every year from here on out," said Patrick Kaser, managing director and portfolio manager at Brandywine Global Asset Management. "We think it's an exceptionally cheap stock at this level."

Kaser's firm owns approximately 120,000 shares of Apple and has been adding to their position this year as the stock price has fallen.

"Investors have prepared themselves and then some, if we hit that $8 guidance for next quarter that will probably be a very positive number in the eyes of the street," Kaser said. "Expectations are so low that if they do come in anywhere $8 (in earnings per share) or higher for next quarter, I think there's going to be a very positive reaction in the stock."

Timothy Lesko, principal at Granite Investment Advisors, said he expects weakness in Apple's earnings and guidance, but sees the install base and new product cycle lending the company "a really compelling valuation and a cheap stock regardless of what happens on a quarter-to-quarter basis." Lesko's firm owns 23,000 shares of Apple as of December 31, 2012.

Lesko said he is encouraged by Apple's strong market share and said that Samsung is more of a threat to Android devices.

"I get the sense that perhaps smartphones themselves have not been selling that well, so perhaps that has caused some of the concern," Lesko said.

— Reuters contributed to this report.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul