NEW YORK ( TheStreet) -- Don't let the title of this article fool you. There are many companies that have done quite well for themselves operating not only out of the third slot, but, and at times, even lower.Names like Lenovo ( LNVGY), DHL and to a lesser extent Kmart, have posted decent results while operating behind multiple leaders. In the case of Baker Hughes ( BHI), which has consistently ranked third behind leaders Schlumberger ( SLB) and Halliburton ( HAL), I've been waiting for the company to finally take that extra step forward. It hasn't happened. While Baker Hughes does have the potential to surpass, say, Halliburton, management has been unable to overcome weak prices and poor North American growth. But the Street still believes. While Baker Hughes' operational results have lagged both Schlumberger and Halliburton, including a 27% profit decline in the July quarter, Baker Hughes' stock has climbed 24% year-to-date and now sits near its 52-week high. This is a testament not only to the trust that the company's management still commands, but investors are willing to risk strong gains on the hopes that they will be rewarded if/when the industry fully rebounds, as experts have predicted. Friday, the company will report its third-quarter results, and the Street will be looking for earnings of 78 cents per share on revenue of $5.76 billion. While the growth estimate for profits is somewhat feeble at 7% year-over-year, it would be an understatement to call it an "improvement" over the 27% decline in the July quarter, which followed a 30% decline in the April quarter. In fairness, Baker Hughes wasn't the only one of the big three that has struggled with weak prices and poor demand, but in an industry that is always so focused on the bottom line, such a meaningful drop in profits is hard to ignore, helped (in part) by a 3% decline in gross margin. Elsewhere, investors should also listen intently on how well the company performs in overseas markets. International growth has been one of management's main objectives, a critical area given the significant North American exposure that Baker Hughes has. The extent to which the company can build its international presence will play a major role in how well-diversified Baker Hughes becomes.
To that end, management has done a solid job in its execution, including 7% international growth in the July quarter, which beat Street estimates. But if Baker Hughes can do better than merely maintaining its international momentum and actually post growth in areas like Mideast/Asia, Russia and Africa (not to mention, Latin America, which recently declined 8%), Baker Hughes stock just might have a little more room to run. But those are some big "ifs." In the meantime, I don't believe that North America will remain a weak link indefinitely, especially as signs have now pointed to a bottom in the industry. What's more, as management works build leverage in the emerging markets, Baker Hughes will be able to rely on its international strength to offset ongoing weakness in other regions. This is an advantage the company did not have before. Having said that, unlike Schlumberger and, to a lesser extent, Halliburton, I'm still not in love with the stock, especially as it rests near its 52-week high. But despite these risks and operational struggles, there are also signs that the business in moving in the right direction, third place or otherwise. At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.