We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Nu Holdings Stock Falls 21% in 3 Months: Is This a Buying Opportunity?
Read MoreHide Full Article
Nu Holdings Ltd. (NU - Free Report) has delivered impressive performance this year. Its stock has surged 41%, significantly outperforming the industry‘s growth of 10%.
However, the stock has faced a recent downturn, declining 21% over the past three months, indicating an ongoing correction. In comparison, its peers have shown varied results. Banco Santander (Brasil) S.A. (BSBR - Free Report) dropped 27%, while SoFi Technologies (SOFI - Free Report) soared with a remarkable 103% gain during the same period.
Image Source: Zacks Investment Research
This recent decline in NU shares raises the question of whether this could be a timely opportunity for investors to buy. Let’s explore the company’s outlook.
As a trailblazer in the fintech industry, Nu Holdings leverages a digital-first and scalable business model to drive down operational costs while boosting efficiency. This innovative approach has positioned NU as a disruptor in traditional banking, enhancing financial inclusion and accessibility across its markets. NuBank, NU’s flagship platform, has earned recognition as one of Latin America’s most trusted and prominent brands.
In Brazil, a market dominated by traditional banking giants, NU has carved out a distinct identity with its innovative cost structure and customer-centric model. Its customer base continues to grow at an impressive pace, propelled by its digital-first strategy. The company is also making substantial strides in expanding its operations across Latin America, particularly in Mexico and Colombia, where adoption is accelerating. With opportunities to penetrate untapped regions, NU’s footprint is poised to expand further. During the third quarter of 2024, the company added 5.2 million customers, bringing its global customer count to 109.7 million. The increasing trend toward digitization is expected to sustain and enhance this growth trajectory.
NU’s revenue model is highly diversified, encompassing streams such as lending, interchange fees, and marketplace services. This diversification not only mitigates risks but also provides stability during economic uncertainties. The company has consistently demonstrated robust revenue growth, driven by higher monetization of its platform and increased user engagement. Key areas like credit cards and personal loans have significantly contributed to its financial success. In the third quarter, NU reported a remarkable 56% year-over-year increase in revenues.
NU’s Strong Returns on Capital
Return on equity (ROE), a measure of profitability, reflects how effectively a company uses its shareholders' investments to generate earnings. NU’s trailing 12-month ROE is 28.7% compared with the industry’s average of 10.8%.
Image Source: Zacks Investment Research
NU has also shown strong returns on invested capital (ROIC), with a trailing 12-month ROIC of 12.5%, well above the industry average of 3.6%.
Image Source: Zacks Investment Research
NU’s Promising Top and Bottom-Line Growth
The Zacks Consensus Estimate for NU’s 2024 earnings is pegged at 42 cents, indicating 75% growth from the year-ago level. Earnings in 2025 are expected to increase 40% from the prior-year actuals. The company’s sales are expected to grow 47% and 34% year-over-year, respectively, in 2024 and 2025.
High Prospects, But Timing is Key
NU’s effective business model, strong growth prospects, and expanding customer base contribute to its potential for continued success. However, given the substantial increase in the stock’s price year to date and its recent entry in the correction phase, the stock could experience a further correction. Timing the market is crucial, and potential investors may benefit from waiting for a further dip before buying.
Image: Bigstock
Nu Holdings Stock Falls 21% in 3 Months: Is This a Buying Opportunity?
Nu Holdings Ltd. (NU - Free Report) has delivered impressive performance this year. Its stock has surged 41%, significantly outperforming the industry‘s growth of 10%.
However, the stock has faced a recent downturn, declining 21% over the past three months, indicating an ongoing correction. In comparison, its peers have shown varied results. Banco Santander (Brasil) S.A. (BSBR - Free Report) dropped 27%, while SoFi Technologies (SOFI - Free Report) soared with a remarkable 103% gain during the same period.
This recent decline in NU shares raises the question of whether this could be a timely opportunity for investors to buy. Let’s explore the company’s outlook.
NU: Trailblazing Fintech Leader Redefines Banking Landscape
As a trailblazer in the fintech industry, Nu Holdings leverages a digital-first and scalable business model to drive down operational costs while boosting efficiency. This innovative approach has positioned NU as a disruptor in traditional banking, enhancing financial inclusion and accessibility across its markets. NuBank, NU’s flagship platform, has earned recognition as one of Latin America’s most trusted and prominent brands.
In Brazil, a market dominated by traditional banking giants, NU has carved out a distinct identity with its innovative cost structure and customer-centric model. Its customer base continues to grow at an impressive pace, propelled by its digital-first strategy. The company is also making substantial strides in expanding its operations across Latin America, particularly in Mexico and Colombia, where adoption is accelerating. With opportunities to penetrate untapped regions, NU’s footprint is poised to expand further. During the third quarter of 2024, the company added 5.2 million customers, bringing its global customer count to 109.7 million. The increasing trend toward digitization is expected to sustain and enhance this growth trajectory.
NU’s revenue model is highly diversified, encompassing streams such as lending, interchange fees, and marketplace services. This diversification not only mitigates risks but also provides stability during economic uncertainties. The company has consistently demonstrated robust revenue growth, driven by higher monetization of its platform and increased user engagement. Key areas like credit cards and personal loans have significantly contributed to its financial success. In the third quarter, NU reported a remarkable 56% year-over-year increase in revenues.
NU’s Strong Returns on Capital
Return on equity (ROE), a measure of profitability, reflects how effectively a company uses its shareholders' investments to generate earnings. NU’s trailing 12-month ROE is 28.7% compared with the industry’s average of 10.8%.
NU has also shown strong returns on invested capital (ROIC), with a trailing 12-month ROIC of 12.5%, well above the industry average of 3.6%.
Image Source: Zacks Investment Research
NU’s Promising Top and Bottom-Line Growth
The Zacks Consensus Estimate for NU’s 2024 earnings is pegged at 42 cents, indicating 75% growth from the year-ago level. Earnings in 2025 are expected to increase 40% from the prior-year actuals. The company’s sales are expected to grow 47% and 34% year-over-year, respectively, in 2024 and 2025.
High Prospects, But Timing is Key
NU’s effective business model, strong growth prospects, and expanding customer base contribute to its potential for continued success. However, given the substantial increase in the stock’s price year to date and its recent entry in the correction phase, the stock could experience a further correction. Timing the market is crucial, and potential investors may benefit from waiting for a further dip before buying.
NU currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.