ZACKS·2026-01-21 19:11Core Insights - Nu Holdings (NU) and Dave (DAVE) are both active in the fintech and digital banking sectors, focusing on the underbanked population, with NU primarily in Latin America and DAVE in the U.S. [1] Group 1: Nu Holdings (NU) - NU has demonstrated strong revenue growth, achieving a 14% sequential increase in Q3 2025, driven by its transformation into an AI-native super app [2][10] - The company reported a 19% increase in net income during the same quarter, leading to a 200 basis points improvement in margins, while maintaining a low cost to serve per active customer below $1 [3][10] - NU added 4.3 million customers in Q3 2025, bringing the total to 127 million, with a monthly average revenue per active customer (ARPAC) of $13.4 and a monthly activity rate of 83% [4][10] - The company has successfully expanded its market presence in Mexico, serving 14% of the population and achieving an ARPAC of $12.5 while keeping costs low [5] Group 2: Dave (DAVE) - DAVE's new pricing model and growth in ExtraCash originations contributed to a 15% revenue increase from the previous quarter and a 63% year-over-year growth in Q3 2025 [6][10] - The company achieved a significant 193% year-over-year increase in adjusted net income, despite rising operating expenses, indicating improved operational efficiency [7][10] - DAVE's average 28-day delinquency rate decreased to 2.33% in Q3 2025, showcasing effective credit risk management [8] - The new fee model, which includes a flat 5% fee on ExtraCash transactions, is designed to be more accessible for the underbanked demographic [9] Group 3: Financial Estimates and Valuation - The Zacks Consensus Estimate for NU's 2026 sales is $20.2 billion, reflecting a 29.5% year-over-year growth, with earnings expected to rise by 42.5% to 85 cents per share [12] - For DAVE, the 2026 sales estimate is $656.4 million, indicating a 20.2% year-over-year growth, with earnings projected to increase by 8% to $14 per share [13] - NU is trading at a forward P/E ratio of 19.53X, while DAVE is at 12.99X, indicating that DAVE is significantly cheaper compared to its historical valuations [14] Group 4: Investment Recommendations - NU is recommended for portfolio inclusion due to its scale, customer base, and efficient AI-driven cost structure, positioning it as a strong player in the fintech sector [16] - DAVE is advised to be retained for now, as it shows growth potential but faces competitive pressures that may impact its profitability [17] - NU's growth trajectory and market presence provide a more attractive risk-reward profile compared to DAVE [18]