Kelsian Group's (ASX:KLS) sale of its tourism business will improve the company's earnings quality as the divested earnings are more discretionary and have no fuel-cost pass-through, while also helping to lower its capital intensity, Jarden said in a Thursday note.

Based on the company's updated guidance, the investment firm estimates the sale is around 4% dilutive to fiscal 2027 earnings per share.

However, the deal also improves gearing from 2.5 times in fiscal 2026 to 1.9 times in fiscal 2027, and allows optionality for mergers and acquisitions in the US, which Jarden estimates would be 3% to 7% EPS accretive if fully redeployed.

"We think [Kelsian Group] is a better business than the market gives it credit for," the equity research firm said, noting that the company's remaining business following the sale has lower fuel price exposure and strong market positions.

Jarden expects Kelsian to use the proceeds from the sale partly to pay down debt and possibly for M&A optionality in the US.

The investment firm maintained an overweight rating on Kelsian with an unchanged target price of AU$4.80.

Shares of Kelsian Group fell 6% in recent Friday trade.