Trina Solar (NYSE:TSL) will release its quarterly report on Tuesday, and investors who bought in during the worst days of late 2012 have seen their shares soar almost 700% in less than a year. But even though shareholders are increasingly enthusiastic about Trina's long-term prospects, its earnings still show how hard it needs to fight against rivals Yingli Green Energy (NYSE:YGE) and Canadian Solar (NASDAQ:CSIQ) in order to secure its place in the highly competitive Chinese solar industry.

China's solar industry caused immense problems for the global solar market in recent years, as production overcapacity led to gluts of modules on the market, hurting pricing power and causing margins to fall to unsustainable levels. Even though more favorable trends in the broader industry have raised optimism about potentially improving conditions for the broader market, Trina Solar still faces the challenges of getting profitable and keeping its debt under control. Let's take an early look at what's been happening with Trina Solar over the past quarter and what we're likely to see in its report.

Stats on Trina Solar

Analyst EPS Estimate

($0.14)

Year-Ago EPS

($0.81)

Revenue Estimate

$472.92 million

Change From Year-Ago Revenue

59%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

How Trina Solar earnings are shining brighter
There's no question that analysts have gotten a lot more optimistic in recent months about Trina earnings, slashing their third-quarter loss projections by more than half and now predicting that the company could become profitable as early as next year. The stock has responded with similar enthusiasm, climbing a whopping 132% just since mid-August.

Trina brought its considerable momentum into the current quarter, with its second-quarter revenue climbing 69% to help the solar company cut its net losses almost by half. In a welcome change, pricing power returned to Trina during the second quarter, with sales figures outpacing shipment growth and potentially supporting the return to profitability that shareholders have sought for a long time.

Trina still relies on China's domestic solar market to a somewhat troubling extent, with the company having projected more than a quarter of its sales coming from within China. The nation's recent moves to boost solar use have undoubtedly helped the company's shipment volume, but what other solar players have found is that much better margins are available in key overseas markets like Japan. Trina hopes that a new trade agreement will help boost margins from European sales, and if it can get a bigger presence in Japan, Trina could get much closer to profitability in the near future.

The key advantage that Trina has over Canadian Solar and Yingli Green Energy is that its debt levels are under better control. Canadian Solar's debt-to-equity ratio is almost double Trina's. Yingli Green Energy is in even worse shape, with more than $2 billion in net debt hanging over the company. Having a healthier balance sheet lets Trina have more flexibility in choosing future growth strategies.

In the Trina earnings report, watch to see if the solar company can continue cutting its losses and finding higher-potential markets to boost sales. If it can, then Trina could outpace Yingli and Canadian Solar in finding its way to profitability sooner rather than later.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.