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Nu Holdings Ltd. Class A (NU)
:NU
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Nu Holdings
(NYSE:NU)
75Outperform
Positive Factors
Customer Base Expansion
Encouraging progress with the affluent customer base as both the number of Ultravioleta holders and TPV almost doubled.
Earnings
Nubank reported GAAP net income of US$553 million, up 14% q/q and 83% y/y, coming in 7% above our estimate of US$518 million, 9% above sell-side consensus of US$507 million, and 11% above buy-side consensus of US$500 million.
Negative Factors
Macroeconomic Environment
Brazil's macro environment is the largest single factor driving the weakness in the stock more recently.
Nu Holdings (NU) vs. S&P 500 (SPY)
Market Cap
$48.05B
Dividend YieldN/A
Average Volume (3M)59.28M
Price to Earnings (P/E)24.6
Beta (1Y)1.41
Revenue Growth47.34%
EPS Growth89.96%
CountryUS
Employees7,686
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)0.41
Shares Outstanding3,697,776,100
10 Day Avg. Volume77,164,202
30 Day Avg. Volume59,282,444
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)N/A
Price to Sales (P/S)8.05
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
$15.75Price Target Upside55.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
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
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.79B | 5.63B | 4.79B | 1.70B | 648.48M | Gross Profit |
| 4.79B | 5.63B | 1.66B | 732.92M | 400.31M | EBIT |
| 2.69B | 1.54B | -308.90M | -170.16M | -92.03M | EBITDA |
| 3.13B | 1.60B | -273.32M | -152.82M | -84.60M | Net Income Common Stockholders |
| 1.51B | 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
Negative
10.12
Price Trends
11.87
Negative
12.68
Negative
12.88
Negative
Market Momentum
-0.58
Positive
38.56
Neutral
32.28
Neutral
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 10.12 is below the 20-day moving average (MA) of 11.80, below the 50-day MA of 11.87, and below the 200-day MA of 12.88, indicating a bearish trend. The MACD of -0.58 indicates Positive momentum. The RSI at 38.56 is Neutral, neither overbought nor oversold. The STOCH value of 32.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NU.
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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $48.05B | 24.60 | 28.07% | ― | 47.34% | 89.96% | |
74 Outperform | $67.25B | 17.01 | 20.00% | ― | 7.10% | 4.45% | |
74 Outperform | $34.25B | 12.15 | 14.50% | ― | 10.06% | 38060.98% | |
73 Outperform | $24.04B | 16.35 | 6.94% | 0.99% | 4.68% | 63.39% | |
64 Neutral | $12.35B | 29.47 | 8.26% | ― | 29.33% | ― | |
64 Neutral | $14.85B | ― | -7.34% | ― | 46.27% | 74.39% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% |
* Financial Sector Average
Performance Comparison
NU
Nu Holdings
10.60
-0.81
-7.10%
GPN
Global Payments
93.25
-38.67
-29.31%
PYPL
PayPal Holdings
67.98
7.95
13.24%
XYZ
Block
55.29
-26.42
-32.33%
SOFI
SoFi Technologies
11.26
3.78
50.53%
AFRM
Affirm Holdings
46.77
9.25
24.65%
Nu Holdings Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -24.14% | 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.