Apple Stock Has a Lot to Prove on Tuesday

Shares ofApple (NASDAQ: AAPL)are on fire. The world's most valuable consumer tech company's stock hit a new all-time high on Monday. Momentum is clearly in its corner. Apple stock has soared 53% over the past year, trading 24% higher so far in 2017.

One would think that expectations would be high given the stock's heady gains, but analysts don't necessarily see it that way. Wall Street pros see $52.97 billion in revenue, just 5% higher than the prior year's fiscal second quarter. Those same analysts see earnings per share rising 6% to $2.02. This isn't the kind of growth on both ends of the income statement that one typically bargains for when a stock has popped 53% over the past 12 months.

A silver lining to single-digit growth could be that profits are growing faster than sales, but that's not necessarily the case here. Analysts see earnings per share growing slightly faster than revenue, but that's on a per-share basis. Apple has been a voracious eater of its own stock through aggressive buybacks. It has lowered its share count by nearly 5% over the past four quarters, so net income itself will be relatively flat -- and net margin lower -- if analysts are on target this time.

Image source: Apple.

There's a lot at stake

The bullish case for Apple -- and it's a strong one -- is that investors have been bidding up the shares ahead of the next iPhone. Apple introduced the original iPhone in the summer of 2007, and all of the buzz finds the class act of Cupertino pulling out all of the stops in making the next smartphone upgrade revolutionary instead of merely evolutionary. From curved OLED screens to wireless charging, the rumor mill is churning out thick chatter that could stir the masses into trading in their old iPhone and even Android smartphones.

Looking back may not be pretty, and even bulls concede that. UBS analyst Steven Milunovich has a buy rating on the stock, but on Monday he put out an analyst note pointing out that iPhone demand remains soft. He leans on a survey showing that iPhone-buying intent is at a nine-year low, and that the number of potential buyers uncertain about which phone they would be buy next is on the rise. That's a scary suggestion just a day before Apple reports given how it lives and dies on the iPhone these days, but he's also sticking to his forecast for double-digit growth in Apple's fiscal 2018 on the strength of the iPhone 8 -- or whatever it will be called -- when it rolls out later this calendar year.

The weak demand now could be folks just waiting for the evolutionary next model, something that would be great for Apple's long-term potential but problematic in the near term. The timing of the next release is a front-and-center topic if folks are holding back on upgrades or even first-time purchases. The last few models have rolled out in the fall, but the 10th anniversary of the original iPhone actually takes place at the end of next month.

No one expects Apple to introduce the next iPhone during the current quarter, but if guidance and growth prospects will be weak until that happens, any hints on a release date will be what could drive the stock after Tuesday's market close.

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Rick Munarriz owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.