Can Apple Inc. Beat Wall Street’s Lofty Earnings Expectations?

Apple Inc. (NASDAQ:AAPL) is scheduled to release its next earnings report on Monday after closing bell. Wall Street already has its hopes up. The company set a new record for iPhone sales over launch weekend, and all indications are that Apple is heading for a blockbuster earnings report.

What Wall Street wants from Apple

But will the company manage to beat even the loftiest of expectations on Wall Street? On average, consensus estimates suggest that Apple will report revenue of $39.8 billion and earnings of $1.31 per share.

In the same quarter last year, Apple posted $37.5 billion in revenue and earnings of $1.18 (split adjusted) per share. The company guided for gross margins of between 37% and 38% for the quarter, so Wall Street wants to see them in that range. Apple also said that it expects revenue for the September quarter to be between $37 billion and $40 billion, which means Wall Street is looking for a number toward the very top of that guided range.

Gauging iPhone sales

iPhone sales may be the most important metric investors will be looking at. Apple did sell over 10 million iPhones over launch weekend, but there is always a slowdown before then as consumers wait for the new models. Also the September quarter includes only a couple weeks of iPhone 6 and 6 Plus sales.

There has been a wide range of iPhone sales estimates for the quarter. Consensus estimates suggest that Apple may have sold about 38 million iPhones during the fourth fiscal quarter.

The iPhone’s average selling price will also be an important metric. Analysts are generally expecting a mix shift toward the more expensive iPhone 6 Plus and iPhone 6 handsets with higher storage, which are also more expensive. Some are estimating an average selling price of up to $590.

Apple’s other products

Another question that will be answered on Monday is just how much weak iPad sales will offset the late-quarter strength in iPhone sales. Apple unveiled new iPads on Thursday, and iPad sales have already been struggling over the last few quarters. Consumers who were interested in a new iPad probably waited to see the new ones, and since sales were already slow, this could be a trouble area in Apple’s earnings report. However, it might be one Wall Street is willing to overlook for now in light of Thursday’s iPad Air 2 unveiling.

Mac sales could offer a surprise for the September quarter, as sales Apple’s desktop computers have managed to stay strong despite a declining PC market. Shipments of the Mac in the second fiscal quarter of this year grew by about 18%, hitting 4.4 million units.

What about guidance?

Of course guidance is also a key area to watch. Analyst estimates for the December quarter suggest Apple will sell around 65.3 million iPhones in the quarter. That is a tall order, but it may be doable, as Apple added China and will have the iPhone 6 and 6 Plus available in more than 100 countries by the end of the year.

Some are estimating revenue for the first fiscal quarter to be approximately $63.4 billion for the quarter.