Nu Holdings Gains 34% in 6 Months: Should Investors Buy the Stock?

Core Insights - Nu Holdings Ltd. (NU) has achieved a 33.6% increase in stock price over the past six months, outperforming the industry average of 25.8% and the Zacks S&P 500 Composite's 14.8% return [1] - The company has surpassed industry peers such as ING Group (27.7% growth) and Royal Bank of Canada (30.4% growth) [1] Stock Performance - NU's stock rose by 4.9% recently, compared to ING Group's 4.1% and Royal Bank of Canada's 1.3% growth [4] Revenue Growth and Customer Base - Nu Holdings has expanded its customer base to 127 million, adding over 4 million users in the third quarter of 2025, with an activity rate exceeding 83% [5][6] - The company focuses on recurring revenues, which enhances performance stability amid macroeconomic pressures [5] Business Model and Efficiency - NU's strategy includes high-engagement products and low-cost deposits, moving away from higher-risk credit [6] - The tech-driven platform allows for operational efficiency, directing incremental revenues towards a cost-effective structure [8] Capital Efficiency - NU's trailing 12-month return on equity is 30.1%, significantly higher than the industry average of 11.4% [9] - The return on invested capital stands at 14.3%, compared to the industry average of 3.4%, indicating effective capital deployment [9] Financial Outlook - The Zacks Consensus Estimate for NU's 2025 revenues is $15.6 billion, reflecting a 35.7% growth year-over-year [11] - EPS estimates for 2025 are set at 60 cents, indicating a 33.3% year-over-year growth, with 2026 expected to see a 42.5% increase [11] Analyst Confidence - Over the past 60 days, three EPS estimates for both 2025 and 2026 have been revised upward, with no downward revisions, showing increased analyst confidence [12] Investment Recommendation - NU presents a strong growth narrative, driven by its ability to generate recurring revenues and mitigate macroeconomic challenges [13] - The stock is fundamentally strong, with profitability metrics indicating above industry-average returns, leading to a recommendation for investors to buy [14]