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Is the Qube (ASX:QUB) share price undervalued?

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The Qube Holdings Ltd (ASX: QUB) share price rocketed 5.0% higher on Friday and could be back in the buy zone. The big question for investors right now is, how should we value the ASX logistics share?

What does Qube do?

Qube is Australia’s largest integrated provider of import and export logistics services. The Aussie company operates at more than 125 locations across Australia, New Zealand, Papua New Guinea and South East Asia.

There have been concerns about the coronavirus pandemic disrupting logistics routes and stifling trade. The Qube share price has been smashed 15.4% lower in 2020 but I think there could be some upside.

What do the numbers say?

Admittedly, the numbers don’t tell a great story. The Qube share price trades at a price-to-earnings (P/E) ratio of 52.8x which is quite pricey for a logistics/industrials group.

Qube does boast a $5.2 billion market capitalisation which means it is a heavy hitter on the ASX. It also has a 1.9% dividend yield which is nothing to sneeze at in the current environment. 

The Qube share price is trading 21.43% below its 52-week high of $3.50 per share which means there could be further potential upside on offer.

It’s hard to find equivalent ASX-listed peers for a technology/logistics company like Qube. 

Shares in rail freight operator, Aurizon Holdings Ltd (ASX: AZJ), trade at 13.9x earnings while tech stocks like Afterpay Ltd (ASX: APT) are valued at some eye-watering price-to-sales ratios.

Foolish takeaway

I think you really have to believe in the growth story to think the Qube share price is undervalued. If the pandemic has shown me anything, it’s that automation and outsourced logistics demand is climbing.

That’s good news for Qube and its business partners like Woolworths Group Ltd (ASX: WOW). If the logistics group can capitalise on this trend and continue to innovate, I think the Qube share price can bounce back strongly in 2021.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths Limited. The Motley Fool Australia has recommended Aurizon Holdings Limited. 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 Scott Phillips.

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