Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- GigaMedia (Nasdaq: GIGM) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and disappointing return on equity.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • GIGAMEDIA LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GIGAMEDIA LTD reported poor results of -$0.68 versus -$0.26 in the prior year.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 97.2% when compared to the same quarter one year ago, falling from -$15.40 million to -$30.36 million.
  • 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 Internet Software & Services industry and the overall market, GIGAMEDIA LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • 36.86% is the gross profit margin for GIGAMEDIA LTD which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, GIGM's net profit margin of -898.31% significantly underperformed when compared to the industry average.
  • The revenue fell significantly faster than the industry average of 16.2%. Since the same quarter one year prior, revenues fell by 30.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Gigamedia Limited, through its subsidiaries, engages in the operation of online games for online game players; and cloud computing software and services business in Asia. GigaMedia has a market cap of $62.9 million and is part of the technology sector and computer software & services industry. Shares are up 24.3% year to date as of the close of trading on Tuesday.

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

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.