NEW YORK (TheStreet) -- Shares of Barnes & Noble Inc. (BKS) - Get Report are gaining by 1.59% to $24.97 in mid-afternoon trading on Monday, after the global bookseller announced that it has invested in the study materials business Flashnotes Inc. in an effort to expand its college bookstore business before spinning it off into a separate public company later in the year.

Flashnotes is an online market place for college students to buy and sell student-created course-specific study materials.

The two companies have also entered into a strategic alliance agreement enabling Barnes & Noble College to promote Flashnotes at partner schools and on a digital platform.

"One of the key objectives of the planned separation of Barnes & Noble Education, comprising the Barnes & Noble College business, from Barnes & Noble Inc., is to pursue strategic opportunities in the growing educational services markets, and our investment in Flashnotes.com is consistent with that objective," Barnes & Noble Education CEO Max Roberts said in a statement.

"This investment from Barnes & Noble Education is a powerful validation of how peer-to-peer learning is influencing the higher education process. We're very excited to be partnering with such an iconic brand that shares our belief in empowering students to help one another," Mike Matousek, founder of Flashnotes .com said in a statement on the Barnes & Noble website.

Separately, TheStreet Ratings team rates BARNES & NOBLE INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BARNES & NOBLE INC (BKS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Net operating cash flow has increased to $193.63 million or 35.45% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.17%.
• Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
• BARNES & NOBLE INC's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BARNES & NOBLE INC continued to lose money by earning -$1.27 versus -$3.01 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus -$1.27).
• BKS's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.23 is very weak and demonstrates a lack of ability to pay short-term obligations.
• BKS, with its decline in revenue, underperformed when compared the industry average of 14.2%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
• You can view the full analysis from the report here: BKS Ratings Report