What: Take a look back at the share price chart of leading ports and logistics player Qube Holdings Ltd (ASX: QUB) and it's easy to see why shareholders may be in a state of bewilderment.
Up until as recently as early June this calendar year shareholders were sitting on tidy profits with the stock lifting from just below $2.50 at the start of the year to touch the $3 level.
Then, since the start of June the share price has gone into a serious tailspin with it sinking all the way down to close yesterday's trading session at $2.04 – a level not seen since early 2014. The shares have now registered a fall of 16% for 2015, which is a significantly worse performance than the 3.7% decline in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
So What: According to data supplied by Thomson Consensus Estimates, Qube's earnings per share (EPS) and dividends per share (DPS) are expected to be the following:
- Financial year (FY) 2015: EPS 11.2 cents per share (cps), DPS 5.5 cps
- FY 2016: EPS 10.1 cps, DPS 5.8 cps
- FY 2017: EPS 10.8 cps, DPS 6.1 cps
- FY 2018: EPS 13 cps, DPS 7.1 cps
With the share price at $2.04, looking out to June 2018 the price-to-earnings ratio arguably looks attractive at 15.7x considering the step-change in earnings that should occur around this time as the Moorebank facility scales up.
Now What: As the recent acquisition proposal for Asciano Ltd (ASX: AIO) has shown, there is demand for high-quality infrastructure assets in the transportation sector. Qube's Moorebank intermodal facility is an exciting asset with significant potential, however, there are also plenty of risks involved considering the lead time and the capital expenditure costs involved with this development. Investors need to take the downside risks into consideration when weighing up the stock's upside potential.
