Apple Inc. (AAPL): Could an iPad Refresh Boost Earnings? Not by Much.

Assuming Apple’s profit margins for the iPad segment are affected by the lower gross margins associated with the iPad Mini and the new form factor on a redesigned iPad, I’ll use an estimated gross margin on the product line of 36% for this year and 40% last year.

The result? Apple could end up with an incremental growth of approximately $0.3 to $0.4 billion in its third-quarter earnings. That’s an increase of about 4.1% to 5.1% — not much.

Are Apple investors doomed?
Apple investors are definitely not doomed. But they shouldn’t expect an iPad refresh to have a large positive effect on Apple’s third-quarter earnings — at just 20% of total revenue, it’s tough for Apple’s iPad to meaningfully move the needle.

Fortunately, Apple investors don’t need much growth for the stock to perform well over the long run. At just 10 times earnings, tough times are priced into the stock. In the short run, however, a very likely boost to Apple’s dividend could compensate for the stock’s lackluster growth in its product segments.

The article Could an iPad Refresh Boost Apple’s Earnings? Not by Much. originally appeared on Fool.com and is written by Daniel Sparks.

Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

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