Nu Holdings (NU) AI Stock Analysis

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Nu Holdings

(NYSE:NU)

75Outperform

Nu Holdings demonstrates robust financial performance with significant growth in revenue and profitability, supported by a strong earnings report. However, technical analysis shows bearish trends and valuation is moderate, which tempers the overall score. The company's strategic focus on customer engagement and market growth positions it well, but challenges in the banking environment and specific operational aspects require monitoring.

Positive Factors

Client Base

Nubank is Latin America’s most successful neobank with over 100 million clients, showing high engagement and operating leverage potential.

Market Position

Nubank's low cost-to-serve and superior tech stack continue to support significant cross selling and market share opportunity; high ROE should ensue.

Product Innovation

Several investors see the new private payroll loan product as an underappreciated growth engine that could expand credit access without significantly pressuring risk-adjusted NIM.

Negative Factors

Currency Impact

Results were negatively impacted by a 13% devaluation of the BRL in the quarter, which distorted growth figures.

Market Share Saturation

Some believe NU has already maxed out its credit market share, especially in credit cards and unsecured loans, and lacks a clear edge in high-income segments or the increasingly crowded payroll loan space.

PIX Financing Concerns

Concerns persist around the drag from PIX financing and potential cannibalization from lower-yielding private payroll loans.

Nu Holdings (NU) vs. S&P 500 (SPY)

Market Cap

$50.44B

Dividend YieldN/A

Average Volume (3M)63.13M

Price to Earnings (P/E)25.6

Beta (1Y)1.27

Revenue Growth47.34%

EPS Growth89.96%

CountryUS

Employees5,403

SectorFinancial

Sector Strength86

IndustryBanks - Diversified

Share Statistics

EPS (TTM)0.41

Shares Outstanding3,697,776,100

10 Day Avg. Volume71,604,299

30 Day Avg. Volume63,130,997

Financial Highlights & Ratios

PEG Ratio0.28

Price to Book (P/B)N/A

Price to Sales (P/S)9.22

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$14.20

Price Target Upside34.60% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Nu Holdings Business Overview & Revenue Model

Company DescriptionNu Holdings (NU) is a leading digital financial technology company primarily serving customers in Latin America. Founded in Brazil, the company operates under the brand name Nubank and offers a wide range of financial services, including digital banking, personal loans, credit cards, and investment products. Nubank is recognized for its innovative, user-friendly mobile platform that provides accessible and transparent financial services to its customers, with a focus on eliminating bureaucracy and offering superior customer experience.

How the Company Makes MoneyNu Holdings generates revenue primarily through its suite of financial products and services. Key revenue streams include interest income from credit card balances and personal loans, interchange fees from card transactions, and fees from its investment and insurance products. The company also benefits from partnerships with other financial institutions and service providers to enhance its product offerings. Additionally, Nu Holdings leverages its extensive customer base to cross-sell various financial products, increasing their lifetime value. A significant factor contributing to its earnings is its low-cost digital platform, which enables efficient scaling and customer acquisition across Latin America.

Nu Holdings Financial Statement Overview

Summary

Nu Holdings exhibits a strong financial position with substantial revenue growth, improved profitability, and effective cash flow management. The company shows resilience and growth potential, supported by a stable balance sheet and robust cash generation.

Income Statement

Very Positive

Nu Holdings has demonstrated robust revenue growth, with Total Revenue increasing significantly over the years. The Gross Profit Margin is strong at 100%, indicating efficient cost management. The Net Profit Margin has improved, reflecting a positive trajectory from previous losses to substantial profitability. EBIT and EBITDA margins are healthy, showcasing effective operational performance.

Balance Sheet

Positive

The company maintains a solid balance sheet with a manageable Debt-to-Equity Ratio. The Return on Equity has seen improvement, highlighting enhanced shareholder value. The Equity Ratio indicates a reasonable proportion of equity financing, signifying stability. However, vigilance is advised due to the banking industry's inherent exposure to financial fluctuations.

Cash Flow

Very Positive

Nu Holdings exhibits positive Free Cash Flow growth, indicating strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio is robust, demonstrating efficient cash conversion from earnings. The Free Cash Flow to Net Income Ratio supports sustainable operations and potential reinvestment opportunities.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
11.52B	8.03B	4.79B	1.70B	737.13M
	Gross Profit
5.25B	3.49B	1.66B	732.92M	326.91M
	EBIT
2.80B	1.54B	-308.90M	-170.16M	-193.18M
	EBITDA
2.87B	1.60B	-273.32M	-152.82M	-185.75M
	Net Income Common Stockholders
1.97B	1.03B	-364.58M	-164.99M	-171.49M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.19B	0.00	4.17B	2.71B	2.34B
	Total Assets
49.93B	43.35B	29.92B	19.86B	10.15B
	Total Debt
1.73B	1.17B	558.75M	135.72M	384.44M
	Net Debt
-7.46B	-12.20B	-3.61B	-2.57B	-1.96B
	Total Liabilities
42.28B	36.94B	25.03B	15.42B	9.72B
	Stockholders Equity
7.65B	6.41B	4.89B	4.44B	438.11M
Cash Flow		Free Cash Flow
2.39B	1.09B	641.27M	-2.95B	969.18M
	Operating Cash Flow
2.40B	1.27B	755.57M	-2.92B	977.17M
	Investing Cash Flow
-330.63M	-177.00M	-127.15M	-154.19M	-16.27M
	Financing Cash Flow
727.74M	425.21M	654.04M	3.34B	237.46M

Nu Holdings Technical Analysis

Technical Analysis Sentiment

Negative

Last Price10.55

Price Trends

50DMA

11.60

Negative

100DMA

11.74

Negative

200DMA

12.76

Negative

Market Momentum

MACD

-0.30

Positive

RSI

40.50

Neutral

STOCH

18.62

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NU, the sentiment is Negative. The current price of 10.55 is below the 20-day moving average (MA) of 10.81, below the 50-day MA of 11.60, and below the 200-day MA of 12.76, indicating a bearish trend. The MACD of -0.30 indicates Positive momentum. The RSI at 40.50 is Neutral, neither overbought nor oversold. The STOCH value of 18.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NU.

Nu Holdings Risk Analysis

Nu Holdings disclosed 1 risk factors in its most recent earnings report. Nu Holdings reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Nu Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BCS	81 Outperform	$48.20B	7.57	9.14%	3.06%	8.58%	35.39%
BBVA	78 Outperform	$73.67B	7.19	18.77%	4.56%	30.24%	28.90%
NWG	77 Outperform	$45.44B	8.49	13.34%	4.61%	18.85%	14.85%
SAN	76 Outperform	$96.00B	7.71	13.16%	2.33%	6.56%	19.02%
ING	75 Outperform	$55.76B	8.51	12.75%	5.58%	4.07%	9.97%
NU	75 Outperform	$50.44B	25.58	28.07%	―	47.34%	89.96%
Sector *	64 Neutral	$13.37B	9.30	9.39%	4.85%	16.11%	-8.85%

* Financial Sector Average

Performance Comparison

Nu Holdings

10.55

-0.40

-3.65%

BBVA

Banco Bilbao

13.03

2.93

29.01%

BCS

Barclays

13.94

5.05

56.81%

ING

ING Groep

18.22

3.47

23.53%

NWG

NatWest Group

11.61

5.05

76.98%

SAN

Banco Santander SA

6.43

1.93

42.89%

Nu Holdings Earnings Call Summary

Earnings Call Date: Feb 20, 2025 | % Change Since: -20.91% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Positive

Nu Holdings demonstrated strong growth in revenue, customer base, and net income, with significant achievements in Mexico and increased deposits and lending. However, challenges remain with PIX financing, net interest margin contraction, and the need for balance sheet optimization.

Highlights

Significant Customer Growth

Nu Holdings now serves over 114 million customers, with 20.4 million net additions in 2024, and active customer base grew 22% year-over-year.

Record Revenue Growth

Revenues grew 58% year-over-year on an FX Neutral basis to $11.5 billion in 2024, driven by sustained ARPAC growth, up 23% year-over-year.

Net Income Surge

Net income almost doubled from 2023 to close to $2 billion with an annualized return on equity of 28%.

Deposit and Lending Growth

Total deposits grew 55% FX Neutral to $28.9 billion, while the interest-earning portfolio expanded 75% to $11.2 billion.

Expansion in Mexico

Achieved a significant milestone by surpassing 10 million customers in Mexico, with deposits growing 438% from 2023 to $4.5 billion.

Lowlights

Challenges with PIX Financing

Nu Holdings is slowing growth in PIX financing due to second-order impacts on NPS, choosing to improve user experience before resuming growth.

Net Interest Margin Contraction

Net interest margin contracted 70 basis points to 17.7% this quarter due to lower credit yields and higher funding costs.

Loan-to-Deposit Ratio Concerns

Loan-to-deposit ratio remains at 39%, indicating a need for balance sheet optimization despite strong deposit growth.

Company Guidance

During the Nu Holdings earnings call for the fourth quarter and full year of 2024, the company reported substantial growth and strategic advancements. Key metrics included a 22% year-over-year increase in active customers to nearly 95 million, with over 114 million total customers served across its geographies. The company added 20.4 million net new customers in 2024. In Brazil, Nu Holdings now serves 58% of the population, while in Mexico, the customer base exceeded 10 million. Total deposits grew by 55% to $28.9 billion on an FX-neutral basis, and the interest-earning portfolio expanded by 75% to $11.2 billion. Revenue surged by 58% year-over-year to $11.5 billion, driven by a 23% increase in ARPAC to $10.7. The efficiency ratio improved to 29.9%, marking Nu as one of the most efficient global financial services platforms. Net income nearly doubled to close to $2 billion, with an annualized return on equity of 28%. These achievements underscore Nu’s robust financial model and strategic focus on customer engagement and market growth across Latin America.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.