WASHINGTON, D.C. (

TheStreet

) -- China's

Yingli Green Energy

(YGE)

will report results Monday morning, the first of the big Chinese solar module makers to attempt to take back control of its fortunes from the current solar sector villain, the euro.

Earnings reports from the sector are known for their surprises. This time around, though, all the surprise has been superseded by the plunge in the euro and the European sovereign debt crisis.

The stocks of the seven largest solar module makers, including Yingli, have

plunged by a collective 30%

in the past month, though a small rally began on Thursday afternoon and continued into Friday, as the market appeared to stabilize after the German parliament approved a regional bailout package.

Putting aside the daily ups and downs in the euro, and the day-to-day changes in the German parliamentary outlook -- a fickle governmental body with which the solar sector is very familiar, given the much-fought-over feed-in tariff changes coming in Germany -- the real question is: Can an earnings report from a Chinese solar company prove a catalyst for solar stocks?

The euro-specific version of that question might be: Can Yingli Green Energy management calm investor fears that a weakened euro will sinking the solar sector?

Canadian Solar

(CSIQ) - Get Report

and

Suntech Power

(STP)

presaged the correction in solar stocks when the two Chinese companies pre-reported weeks ago that big foreign-exchange charges would hurt their profits.

As the European crisis has steepened, solar stock analysts have been busy crunching the numbers as they try to figure out how much the euro slide can siphon off earnings, particularly from the Chinese companies.

The latest calculations came this week from Collins Stewart and Wedbush Securities.

In the case of Yingli, which derives 70% of its revenue from Europe, Collins Stewart is projecting 7 cents per share earnings in the first quarter -- compared with the consensus expectation of 22 cents -- due to a forex charge of $13 million. Collins Stewart expects strong operating results and revenue of $353 million for Yingli, in line with consensus, but as recent trading in solar stocks has shown, current business fundamentals are no match for the euro.

Wedbush Securities estimates that in the worst-case scenario, Yingli's 2010 earnings could decline by as much as 33% from a year ago, if the euro reaches parity with the dollar.

Collins Stewart's worst case -- which it says may overstate the euro impact by as much as 30% -- Yingli's 2011 bottom line could be reduced by anywhere from 10 cents to 72 cents, based on slides in the euro to $1.22, or $1.10.

There are indications that solar module makers are already passing along price increases, or plan to pass on price increases, if the euro falls below $1.20. The

U.S. solar market has been gaining in strenth

as well.

However, European price increases will be much harder to implement once the feed-in tariff reductions hit in Germany. In Italy, which features the most lucrative feed-in tariffs, project developers could absorb higher prices for modules and still generate hefty returns for investors.

In Germany, though, feed-in tariff reductions, coupled with the euro depreciation, make the price hike game harder to play, and Germany is too big a market to not weigh heavily on solar stocks.

At some point, the European solar module vendors who have been crippled by the low-cost Chinese module makers would actually be back on equal footing, in terms of pricing, if the Chinese companies are forced to pass along big price increases.

Additionally, the European debt crisis may still lead to unforeseeable austerity measures from more European countries, which would slow European growth, and hurt the solar sector.

Collins Stewart's outlook for Yingli's second quarter, which also includes a $13 million forex charge, calls for a profit of 13 cents a share, lower than the Street expectation of 25 cents per share.

Analysts are looking for Chinese solar companies to be proactive on the euro issue as the earnings start to roll out.

For one, the Collins Stewart analyst said that Yingli has reported to him that it has already shifted some of its European customers to dollar-denominated contracts and it needs to update investors on these efforts.

"Given the events occurring in Europe, YGE should discuss any changes it has made to its pricing, module allocation or hedging strategy due to the declines seen in the Euro," the analyst wrote, adding "investors want to know what the firm is doing to minimize the impact of this negative development."

Stocks including Yingli, Canadian Solar and Suntech surged on Friday as the market ended the week on a positive note, but that's no guarantee that news over the weekend out of Europe won't once again lead to a Monday market rout.

Sam Dubinsky, analyst at Wells Fargo Securities, wrote in a note on Friday morning that as Yingli is first out with earnings from the Chinese solar companies, "pricing guidance could give some relief to the sector."

Don't expect a good quarter from Yingli, though, in the opinion of Dubinsky. "We expect Yingli to report a tough Q1," he wrote, noting that foreign excange charges will dampen unit sales growth and prices will be "eroded by the weaker euro."

-Reported by Eric Rosenbaum in New York.

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