Nu Holdings Stock Falls 21% in 3 Months: Is This a Buying Opportunity?

Nu Holdings Ltd. NU 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 dropped 27%, while SoFi Technologies SOFI soared with a remarkable 103% gain during the same period.Image Source: Zacks Investment ResearchThis 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 LandscapeAs 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 CapitalReturn 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 ResearchNU 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 ResearchNU’s Promising Top and Bottom-Line GrowthThe 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 KeyNU’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.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Nu Holdings Ltd. (NU): Free Stock Analysis Report Banco Santander Brasil SA (BSBR): Free Stock Analysis Report SoFi Technologies, Inc. (SOFI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks