NEW YORK ( TheStreet) -- Telecom Italia SpA (NYSE: TI.A) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Telecommunication Services industry. The net income has significantly decreased by 648.0% when compared to the same quarter one year ago, falling from $675.53 million to -$3,702.13 million.
  • The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, TELECOM ITALIA SPA - NEW's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, TI.A has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • TELECOM ITALIA SPA - NEW has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TELECOM ITALIA SPA - NEW increased its bottom line by earning $2.15 versus $1.64 in the prior year. For the next year, the market is expecting a contraction of 53.0% in earnings ($1.01 versus $2.15).

Telecom Italia S.p.A., together with its subsidiaries, provides fixed-line and mobile telecommunications, Internet, and media services. The company also operates in office and system solutions. The company has a P/E ratio of 4.6, below the S&P 500 P/E ratio of 17.7. Telecom Italia SpA has a market cap of $20.6 billion and is part of the technology sector and telecommunications industry. Shares are down 2.8% year to date as of the close of trading on Wednesday.

You can view the full Telecom Italia SpA Ratings Report or get investment ideas from our investment research center.
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