Yesterday, First Solar (Nasdaq: FSLR) found out the hard way just how high expectations have gotten for solar stocks lately. Just meeting expectations, or barely exceeding them, isn't enough anymore.

Sales came in at $609.8 million, down 24% quarter over quarter because of the timing of project sales. That was lower than the $648.4 million Wall Street expected, but sales have gotten hard to predict as project sales become a bigger piece of the pie, so I take that miss with a grain of salt. More importantly, earnings per share of $1.80 beat expectations by $0.03. Alas, the earnings beat wasn't enough for investors, and shares are down 5% today as a result.

On the plus side, outlook, normally a focus for investors, was very strong. First Solar raised its earnings-per-share range to between $9.25 and $9.75 in 2011. Wall Street was only looking for $9.12 in earnings for the year, so at least that metric continues to look strong. Gross margin also remained very high, at 48.7% this quarter. That will help cushion First Solar if sales prices come down later in the year, as many expect.

Most importantly, the two numbers I watch closely for at solar companies, efficiency and cost per watt, are both trending in the right direction for First Solar. Panel conversion efficiency is up to 11.6%, and cost per watt fell $0.02 quarter over quarter to $0.75. With Chinese competitor Trina Solar (NYSE: TSL) experiencing higher costs, and poly-Si manufacturers having a harder time cutting costs, it's good to see First Solar squeeze a few pennies out of panel costs.

The problem today is one of expectations. In the last week alone, we've seen Yingli Green Energy (NYSE: YGE), Trina Solar, and JA Solar (Nasdaq: JASO) all crush expectations and confirm huge growth plans for the year. Just beating expectations by a few cents isn't enough this quarter.

Going forward, First Solar is still one of the most reliable solar plays with industry leading costs and a captive pipeline of 2.4 GW of projects in North America alone. It may not give you the upside potential of Chinese competitors, but the risks aren't as high with great margins and low costs.

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Fool contributor Travis Hoium owns shares of First Solar. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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