Here is what amounts to a breakthrough at Apple Inc. (AAPL) these days: talk of larger screens for its phones and tablets. Since the death of founder Steve Jobs in the fall of 2011, the company's new products have been underwhelming.

For investors, that isn't the only thing that changed abruptly since Mr. Jobs's passing. Starting in 2003, Apple seemingly could do no wrong when reporting earnings. Not only did it exceed analyst guidance every quarter until late 2011, but it did so handily, by an average of more than 25%.

Since then, it has beaten expectations only four out of seven quarters--a rate merely on par with the broad market's 'surprise ratio,' according to FactSet. And its stock rose following only two of those reports.

The funny thing about expectations, though, is it doesn't take long for them to become ingrained. With worries rife about iPhone sales and margins, fiscal third-quarter results due Tuesday may be greeted with a wave of relief. After all, the bar has been lowered mightily. A year ago, analysts were calling for earnings per share of $12.02 for the period through June. That has fallen steadily, recently reaching $7.34.

That 40% drop in expectations has come as Apple's stock has underperformed the S&P 500 by 54 percentage points. The one-time highflier is now firmly in value territory on some measures, trading at just less than 11 times forecastearnings for its current fiscal year.

The key to third-quarter results will be product mix, specifically sales of iPhones and iPads. Investors will be hoping for more of the former.

A recent court filing shed light on what analysts have long suspected--that iPhones are wildly profitable. Their gross margin during a two-year period ending last spring was about double those of tablets. Analysts have projected sales of a little more than 26 million iPhones and 17 million iPads during the quarter, about flat versus a year earlier.

Apple's cheapness is somewhat misleading, though. With operating margins still well above rivals in consumer electronics, there may be plenty more erosion to come as the smartphone market becomes commoditized. So investors may want to lighten up on their holdings should earnings surprise positively.