Of the major "Axis" powers (Italy, Germany, and Japan) Italy most definitely was the weakest of the three countries. The problem with Italy wasn't that their soldiers were lacking in morale, as it is often portrayed. Rather the weakness of the Italians during WW2 was their leadership and their outdated military strategy. Italian officers were often incompetents and Mussolini was the worst of them all. The average Italian soldier was well regarded, Erwin Rommel spoke very highly of the average Italian soldier, and he called them "extraordinarily brave", but Rommel had nothing but disdain for the Italian officers.

Italy was not ready for war in 1940. Everyone around Mussolini told him that it was best to wait until 1942-1943 when the Italian army would be modernized and prepared to fight Britain. But the allies were collapsing too quickly and Mussolini didn't want to be left out of the peace talks. So he hastily declared war on Britain and France expecting the war to be over in a few weeks.

The Italian officers were constantly forced into costly assaults by Mussolini, who wanted to show his people that they were winning. The Italian commander in North Africa Rodolfo Graziani, cautioned Mussolini against launching an offensive into Egypt but Mussolini forced him into it. The offensive was a disaster and by the time the British were done attacking the Italians had lost over 300,000 troops (captured and killed). Mussolini was also responsible for the Greece debacle where he was nearly pushed out of Albania (an Italian territory during ww2) by the Greeks and he had to get Hitler to help.

The Italian army was also very outdated. When they launched their offensive into Egypt marched in long columns and established fortified camps. There was almost no mechanization to speak of. The Italian army belonged more to the first world war than to the second. They were behind in terms of weapons technology and just in general they were not equipped to fight a modern, European war.

Sources:

Hitler's Italian Allies by MacGregor Knox

The Fall of Mussolini by Philip Morgan.