NEW YORK (TheStreet) -- Barnes & Noble (BKS) - Get Report shares are up 6.9% to $25.92 in trading on Thursday as the company reversed its plans to spin off its Nook Media digital business and instead spin off its college books unit.

The company announced in June its intentions to spin off its struggling Nook digital e-book business, which at the time also included its college books unit.

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"We said we were separating Nook Digital business from the retail business, but the board decided that separating the college business would allow each business to optimize the opportunities," said company spokeswoman Mary Ellen Keating.

Now the Nook unit will become apart of the retail business which has outperformed the digital unit despite falling sales of its own, according to the Associated Press.

Competition from Amazon.com's (AMZN) - Get Report Kindle and other e-readers have dampened the Nook's prospects as Barnes & Noble reported a 55.4% decline in holiday sales in its digital unit this year to $56 million. Microsoft (MSFT) - Get Report recently sold its stake in Barnes & Noble's Nook unit for $62.4 million.

Barnes & Noble Education Inc. will house the college books unit once the spin off is expected to be completed at the end of August.

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 solid stock price performance, good cash flow from operations, 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:

  • Compared to its closing price of one year ago, BKS's share price has jumped by 47.86%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BKS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $193.63 million or 35.45% when compared to the same quarter last year. In addition, BARNES & NOBLE INC has also vastly surpassed the industry average cash flow growth rate of -19.40%.
  • 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 7.4%. 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