First Solar (NASDAQ:FSLR) is expected to release earnings on Oct. 31 after market close. Its earnings, along with SunPower (NASDAQ:SPWR) earnings on Oct. 30, will be closely watched as they kick off earnings season for the solar sector.

What analysts are expecting
For the quarter, analysts have a consensus estimate of $0.95 in earnings per share and $980.7 million in revenue. 

For the full year, management has guidance of $3.54 to $4.02 in earnings per share and between $3.6 billion to $3.8 billion in net revenue. 

Important points to note
Some important points to note are First Solar's utility scale backlog, utilization, and cell efficiency.

First Solar's strength is that it has the know-how and experience to build large, utility-scale fields. Building utility-scale fields is very profitable and is a big reason why First Solar has one of the solar sector's highest gross margins at 22%. 

Recently, however, First Solar's utility scale backlog growth has stalled in a major way. First Solar's backlog has in fact fallen from 2.6 GW in the beginning of the year to 2.2 GW in early August.  Any indication of backlog stabilization or growth would be good news.

Another point of interest is First Solar's utilization numbers. Unlike competitors such as SunPower and Trina Solar (NYSE: TSL), which are fully utilized and rumored to be expanding capacity next year , First Solar is running only at 75% utilization.  Any increase in utilization should translate directly to the bottom line and augur better things to come.

Lastly, it is important to note First Solar's integration of TetraSun, the 14 person silicon valley start-up that First Solar bought in April 2013. First Solar bought TetraSun for its silicon cell technology, which converts the sun's rays to energy at 21% efficiency at relatively low cost. Currently First Solar's cadmium-telluride cells convert at 18.7% efficiency and any significant improvement in efficiency should lead to lower production cost per watt and higher margins.  

If First Solar can improve its efficiency to the mid twenties, it can eventually compete with SunPower in the very promising commercial and residential rooftop market that is growing over 40% year over year. 

The bottom line
The solar sector is not for the faint of heart. It is filled with high-beta names that may move greatly in either direction on earnings reports.

That being said, in the long term, First Solar has many things going for it.

The solar sector as a whole is very promising as solar energy achieves grid parity in more and more places. The large size of electric energy market practically guarantees great future growth.

First Solar has one of the strongest balance sheets in the industry with $1 billion in net cash . That fortress balance sheet should help First Solar buy growth if it needs it. If First Solar's utility backlog continues to deteriorate, the company can continue to purchase project pipeline deals like it did last quarter with the acquisition of 1.5 GW project pipeline from Element Power . Those purchases may not yield the same profit margins as utility scale projects, but they are still profitable.

For long term investors, the earnings report on Oct. 31 should hopefully provide a sign that the long investment thesis is still on track.