Nu Holdings Stock Soars 60% Year to Date: Buy, Hold, or Sell?

Nu Holdings Ltd. NU has demonstrated remarkable performance this year, with its stock climbing 60%, significantly outpacing the industry’s 28.4% growth.Comparatively, NU’s peers have shown mixed results. Banco Santander (Brasil) S.A. BSBR has declined by 32%, while SoFi Technologies SOFI has recorded a 46.5% increase over the same period.Image Source: Zacks Investment ResearchHowever, NU has experienced recent declines, dropping 6.3% in the last three months and 8.4% over the past month, signaling a potential correction. The stock closed its latest trading session at $13.32, down 17.5% from its 52-week high of $16.15. It is trading below its 50-day moving average, reflecting bearish sentiment among investors.With NU shares experiencing this pullback, investors may question whether this presents a buying opportunity. Let’s delve deeper into the stock’s prospects.NU’s Innovative Fintech ModelAs a frontrunner in the fintech space, Nu Holdings leverages a digital and scalable business model, reducing operational costs and improving efficiency. This positions the company as a disruptor in traditional banking, making financial services more accessible. NuBank, the flagship platform of Nu Holdings, is one of the most recognized and trusted brands in Latin America.NU established itself as a formidable and innovative force in Brazil's traditionally slow-moving banking sector. It set itself apart from the entrenched oligopoly of traditional banks by implementing a unique cost structure. The company continues to experience impressive growth in its customer base, driven by its digital-first approach. It is successfully expanding its footprint in Latin America. Its operations in Mexico and Colombia are gaining traction, with opportunities for further penetration into untapped regions. During the third quarter of 2024, NU added 5.2 million customers, bringing its global total to 109.7 million. The growing trend toward digitization is expected to drive NU’s expansion further.NU generates revenues from a variety of sources, including lending, interchange fees, and marketplace offerings. This diversification helps mitigate risks and provides resilience against economic fluctuations. NU has consistently shown strong revenue growth, supported by increased monetization of its platform. Higher engagement levels among users, especially in credit cards and personal loans, contribute to robust financial performance. The company’s third-quarter revenues rose 56% year over year.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 9.2%.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 4.3%.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 48.2% from the prior-year actuals. The company’s sales are expected to increase 47.3% and 34.9% 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, there is a possibility that the stock could experience a further correction. Timing the market is crucial, and potential investors might 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.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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