Ex-Apple, S&P 500 Tech Sector Expected to Report a Decline in Earnings for Q3

Apple will be a focus company for the market this week, as the company is scheduled to report earnings for the calendar third quarter (fiscal fourth quarter for Apple) on October 27. The current mean EPS estimate for the company for Q3 2015 is $1.87, compared to year-ago actual EPS of $1.42.

Apple is expected to be the largest contributor to earnings growth for the Information Technology sector for Q3 2015. The blended earnings growth rate (combines actual results for companies that have reported and estimated results for companies yet to report) for the Information Technology sector is 2.1%. Excluding Apple, the sector would report a year-over-year decline in earnings of 3.0%.

If Apple reports actual EPS equal to or above the mean EPS estimate, this will mark the 5th consecutive quarter that Apple has been the largest contributor to earnings growth for the Information Technology sector.

What is driving Apple's substantial contribution to earnings growth for the Information Technology sector in recent quarters?

The iPhone product segment has reported revenue growth in excess of 50% in the previous three quarters, and is projected to report revenue growth of 32% in Q3 2015. However, year-over-year comparisons for iPhone sales become more challenging starting in Q4 2015. Thus, Apple is not predicted to be a significant contributor to the expected earnings growth for the Information Technology sector for the first two quarters of 2016.