NEW YORK (

TheStreet

) -- Chinese solar company

Yingli Green Energy

(YGE)

beat the Street in its third quarter results, with gross margin improvement surprising to the positive.

Yingli Green Energy reported earnings of 44 cents, and revenue of $491 million. The Street was looking for earnings of 32 cents on revenue of $477 million.

Yingli raised its 2010 shipment guidance from 950-1000 megawatts to 1,020-1,040 MW, and its gross margin guidance from 31%- 32% to 32%-32.5%.

Yingli expects full-year revenue in the range of $1.78-$1.81 billion. The Street was at $1.71 billion.

Yingli shares were up 3% to 4% in pre-market trading on Friday, though pre-market volume in solar stocks tends to be light. It's been typical of solar earnings to lead to what seem like outsized pre-market rallies, and see those rallies fizzle out during regular trading. Pre-market volume in Yingli shares was 38,000 shares as of 8:30 a.m., according to Nasdaq.

>>Solar Losers: Credit Suisse Call Sends Sector Slipping

Given that healthy earnings beats from most of the other major solar players haven't resulted in big rallies, pre-market trading isn't a reliable guide. However, Yingli did beat healthily and guide gross margins up, and its continuing ramp of its polysilicon plant has been an overhang on the stock as it's been perceived as an overhang on earnings power. Upside in solar stocks right not depends as much on the direction of the euro and the sector outlook for 2011 as it does company fundamentals, as investors have become skittish about the rosy scenario being presented by solar companies.

Yingli shares are down 31% this year.

As much, if not more, though, will probably depend on Yingli's conference call commentary about the pricing and demand outlook for the fourth quarter and 2011. The entire solar sector sold off this week after Credit Suisse downgraded the sector on fears that supply will far outstrip demand by the second half of 2011.

Yingli is viewed, alongside Trina Solar, as one of the cost leaders that will have an advantage in a declining price environment.

-- Written by Eric Rosenbaum from New York.

RELATED STORIES:

>>Solar Stocks After the Selloff: MEM: GT Solar, MEMC

>>Solar Losers: Credit Suisse Call Sends Sector Slipping

>>Solar Stocks After the Selloff: GT Solar, MEMC

>To contact the writer of this article, click here:

Eric Rosenbaum

.

>To follow the writer on Twitter, go to

Eric Rosenbaum

.

>To submit a news tip, send an email to:

tips@thestreet.com

.