Are Qube Holdings Ltd shares worth buying?

Shares in Qube Holdings Ltd (ASX:QUB) are looking volatile. Could they have further to run?

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Shares in Qube Holdings Ltd (ASX: QUB) have been mixed recently as takeover speculation surrounds the business. At $2.22, Qube Holdings shares have regained the ground they had lost since the firm launched its bid for rail and ports operator Asciano Ltd (ASX: AIO).

Most of that gain came from Tuesday's stunning 10% share price surge, which my colleague Mike King analysed here.

Why did this happen to Qube Holdings shares?

This week Qube revealed a result it described as 'solid…despite challenging conditions' for the six months ending 31 December 2015.

Group revenue fell by 5% to $689 million as the market toughened for Qube's Ports & Bulk segment. Qube expects that the downturn in the resources and oil and gas sectors will continue to drag down this division's profitability.

Qube's pursuit of Asciano has come at a cost. $2.8 million for due diligence, and another $2.8 million in interest expenses. Underlying net profit after tax (NPAT) — which strips out those costs — declined by 1.7% to $52.2 million.

It seems investors have already priced general industry weakness into the Qube share price. However, some may hold new concerns for Qube's outlook, where management expects near term demand to 'remain subdued'.

One theme of February's earnings season has been investors savaging companies which announce dividends which fall short of market expectations. On that front, Qube announced an unchanged interim dividend of 2.7 cents per share — which was never going to set a fire under the Qube share price.

What's next for Qube Holdings Ltd?

Investors in Qube Holdings generally aren't there for the dividend. They're backing the ability of Qube's chairman, Chris Corrigan, and managing director, Maurice James, to engineer a deal which brings them Asciano's Patrick container terminals business at a reasonable price.

Qube has spent the last four months as chief antagonist to Asciano's would-be suitor Brookfield Infrastructure Partners, but Qube and Brookfield are now looking to join forces in a new consortium.

If Qube and its backers can gain approval to proceed from the Australian Competition & Consumer Commission (ACCC), the firm could strengthen its market position in shipping, logistics and stevedoring. But at the stroke of a pen, the ACCC could render all of Qube's efforts null and void.

Foolish takeaway

When you buy any stock, to some extent you'll be backing that company's management — but that bet is even more black and white when considering an investment in Qube Holdings. If you believe in Chris Corrigan, Maurice James and their team, then you'll believe in Qube Holdings' long-term attractiveness as a strategic infrastructure investment.

Motley Fool contributor Tim Dohrmann has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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