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Qube Holdings Limited (ASX:QUB) Shares Could Be 43% Below Their Intrinsic Value Estimate
Qube Holdings Limited (ASX:QUB) Shares Could Be 43% Below Their Intrinsic Value Estimate

Yahoo

time3 days ago

  • Business
  • Yahoo

Qube Holdings Limited (ASX:QUB) Shares Could Be 43% Below Their Intrinsic Value Estimate

Explore Qube Holdings's Fair Values from the Community and select yours Key Insights The projected fair value for Qube Holdings is AU$7.82 based on 2 Stage Free Cash Flow to Equity Qube Holdings' AU$4.43 share price signals that it might be 43% undervalued The AU$4.32 analyst price target for QUB is 45% less than our estimate of fair value How far off is Qube Holdings Limited (ASX:QUB) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the forecast future cash flows of the company and discounting them back to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple! We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Crunching The Numbers We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF (A$, Millions) AU$229.5m AU$368.2m AU$481.6m AU$590.0m AU$688.5m AU$775.4m AU$851.1m AU$917.2m AU$975.6m AU$1.03b Growth Rate Estimate Source Analyst x3 Analyst x2 Est @ 30.82% Est @ 22.51% Est @ 16.69% Est @ 12.62% Est @ 9.76% Est @ 7.77% Est @ 6.37% Est @ 5.39% Present Value (A$, Millions) Discounted @ 8.2% AU$212 AU$315 AU$381 AU$431 AU$465 AU$485 AU$492 AU$490 AU$482 AU$470 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$4.2b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.1%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.2%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$1.0b× (1 + 3.1%) ÷ (8.2%– 3.1%) = AU$21b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$21b÷ ( 1 + 8.2%)10= AU$9.6b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is AU$14b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of AU$4.4, the company appears quite good value at a 43% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The Assumptions The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Qube Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.2%, which is based on a levered beta of 1.198. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Qube Holdings SWOT Analysis for Qube Holdings Strength Earnings growth over the past year exceeded the industry. Debt is well covered by cash flow. Weakness Earnings growth over the past year is below its 5-year average. Interest payments on debt are not well covered. Dividend is low compared to the top 25% of dividend payers in the Infrastructure market. Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Threat Paying a dividend but company has no free cash flows. Revenue is forecast to grow slower than 20% per year. Moving On: Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Qube Holdings, there are three essential items you should assess: Risks: Be aware that Qube Holdings is showing 1 warning sign in our investment analysis , you should know about... Future Earnings: How does QUB's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Queen's University reverses plan to raise creche fees for some students
Queen's University reverses plan to raise creche fees for some students

BBC News

time03-08-2025

  • Business
  • BBC News

Queen's University reverses plan to raise creche fees for some students

A plan to more than double childcare fees for some students at Queen's University Belfast (QUB) has been university has said existing students who currently use its childcare will not see their fees at QUB with children were set to pay £66 a day for full-time childcare from September 2025, compared to £28 a day at who currently pay £31 a day for part-time childcare were set to see that rise to £69 a day. When BBC News NI initially reported the rises, Queen's Students' Union called the fee hike "unsustainable".In a statement, a university spokesperson said QUB had "listened to concerns" from affected students."We are pleased to confirm that existing students who use the service and have also registered for the 2025-26 academic year will continue to pay the existing rate for the next three years or until their study period ends, whichever is sooner," they said. New students to pay higher fees However, students enrolling their children with QUB childcare for the first time in September 2025 will have to pay the higher students are not in full-time work, they cannot claim existing childcare subsidies set up by Students' Union had said the increase in childcare would particularly affect postgraduate students with families, and warned that some might have to drop out of university as a was a decision being considered by PhD student Christian Nsonwu until QUB's U-turn. "It's really made us look at our finances and think 'is this something that we can continue? Can I continue to study and afford this?'" he told BBC News Nsonwu is originally from the United States, but has been in Northern Ireland for about 10 has a three-year old son and his wife is expecting their second child in told BBC News NI the rise in childcare fees would present "significant challenges" for him and other students with children. Mr Nsonwu also said QUB's childcare services were one of the main reasons he chose to study for his PhD at the university."We were looking at different universities and really decided that Queen's was the right place for us because it was closer to family and really because their childcare scheme was a huge factor within that," he Nsonwu said childcare was essential for his family and for other students with children."My wife works full-time and there's no possible way to child-rear or take care of your kids while also trying to study full-time," he said. Reversal brings 'significant relief' for parents If the planned rise in fees had gone ahead, Mr Nsonwu said his family's childcare bill would have increased from about £360 a month for childcare three days a week, to about £800 a month for part-time welcomed the university's decision to freeze fees for students like him, who have re-enrolled their children in QUB childcare for 2025-26."That will give us the next year or so until my son goes on to primary school paying a consistent amount we expected," he said."I think it brings a significant amount of relief to parents who are already in use of this service."I think it demonstrates a bit of compassion when it comes to the financial situation these students are in." But Mr Nsonwu said his family, and others, would face paying higher bills for children who were starting in QUB childcare in September."It alleviates a lot of the pressure for one of my children," he said."However for my second child we will be paying this new exorbitant fee, they will not benefit from that reversal in fee increases."My main concern is for parents, or students, who are just starting out."The QUB statement to BBC News NI said the university was "the only higher education provider in Northern Ireland to offer on-site childcare specifically for students"."We remain committed to supporting students to avail of this service - underpinned by a £300,000 annual university subsidy," it continued."In response to wider financial pressures, including a £4.6m increase in National Insurance contributions, we have made the difficult decision to adjust childcare fees while keeping broadly in line with other providers in south Belfast."

Queen's University Belfast appoints Professor M Satish Kumar first Dean of India campus
Queen's University Belfast appoints Professor M Satish Kumar first Dean of India campus

Indian Express

time20-06-2025

  • Business
  • Indian Express

Queen's University Belfast appoints Professor M Satish Kumar first Dean of India campus

Queen's University Belfast (QUB) has announced the appointment of Professor M Satish Kumar as the first Dean of its upcoming international campus in Gujarat International Finance Tec-City (GIFT City), India. Prof Kumar will assume his role in July 2025 and will be based in GIFT City, where he will provide academic leadership across disciplines as the university prepares to launch its India campus. The GIFT City campus is expected to welcome its first cohort of students in early 2026. As the first UK Russell Group university to establish a presence in GIFT City, QUB's expansion is part of a broader strategy to enhance global engagement and foster long-term partnerships with Indian academic institutions, industry stakeholders, and government bodies. According to a statement from the university, Prof Kumar has been associated with QUB for over 25 years, having served in the School of Natural and Built Environment. He also led Queen's Academy India and held the position of Director of Internationalisation, where he contributed to strengthening the university's outreach and collaborations in South Asia. He has previously held visiting professorships at Banaras Hindu University in Varanasi, Jawaharlal Nehru University in New Delhi, and the University of Calcutta in Kolkata. The GIFT City campus will begin with a portfolio of five postgraduate programmes aligned with the demands of the Indian economy. These programmes are being designed to cater to sector-specific skills and will form the core academic offering during the initial phase of operations. QUB will announce the names of academic staff responsible for programme delivery in the coming months. Queen's University Belfast's expansion into India reflects a broader trend in transnational education, with increasing academic and institutional collaborations between the UK and India. The establishment of the GIFT City campus aligns with national policies encouraging international branch campuses and is expected to contribute to both educational and economic development in the region.

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