What to watch for in Apple’s earnings

Apple Inc. is set to report fourth-quarter earnings after the market’s close on Tuesday.

The fourth quarter is typically Apple’s AAPL, -3.19% second-weakest of the year, as it comes just ahead of the busy holiday season. But analysts are anticipating strong iPhone sales, fueled by the release of the iPhone 6s and iPhone 6s Plus in September.

Here’s what to expect:

Earnings: Analysts expect Apple to report earnings per share of $1.88, up from $1.42 in the year-earlier period. Estimize, a fast-growing software platform that uses crowdsourcing from hedge fund executives, brokerages and analysts to make estimates, has Apple earning slightly more: $1.91 a share. Apple has surpassed the FactSet consensus in the last 11 consecutive fiscal quarters.

Revenue: Sell-side analysts expect Apple to report revenue of $50.9 billion, according to FactSet, up from $42.1 billion in the same period last year. Contributors on Estimize are forecasting revenue of $51.4 billion. In July, Apple forecast revenue between $49 billion and $51 billion.

During the quarter, Apple began taking pre-orders for the iPad Pro, iPhone 6s and iPhone 6s Plus, and launched a new Apple TV, however sales from those products won’t be tacked on to Apple’s earnings until the fiscal first quarter, which is typically Apple’s strongest of the year.

What to watch for: While analysts are mostly optimistic on Apple heading into this quarter -- Stifel raised its fourth-quarter 2015 and first-quarter 2016 estimates on iPhone average selling prices this week, citing demand for Apple’s higher-priced and bigger-screen iPhones -- there are a few outliers worried about iPhone sales, especially given the comparison with 2014’s record-breaking year for device sales and the company’s reliance on China, which economy proved fragile last quarter.

SIG Susquehanna Financial Group lowered its estimates this week, citing a more conservative expectation for iPhone 6s and iPhone 6s Plus sell-through in the second-half of 2015.

“The available data suggests initial sales don’t appear to be as strong as we had hoped, and we therefore have less confidence that iPhone can post Y/Y growth off last year’s tough compares,” said SIG Susquehanna analyst Chris Caso.

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