Title: Is Nu Holdings An Interesting Stock? Publication: Compounding Quality (Substack, paid post) Author: Compounding Quality (byline "COMPOUNDING QUALITY"; signed "Team Compounding Quality"); the 90-page Deep Dive referenced is by community Partner Steven Van Der Burg Date: 2026-09-10 (byline SEP 10, 2026; API post_date 2026-09-10 11:44 UTC) URL: https://www.compoundingquality.net/p/is-nu-holdings-an-interesting-stock Audience: only_paid Note: text captured verbatim from the paid post via a logged-in browser session (custom-domain SSO warm-up via /account first). Written post - no timestamps. Emoji bullet markers in the "General Information" block kept as published. Charts and tables are published as images; the ones carrying figures are transcribed inline below as [Table image - ...] blocks at the point they appear (Fiscal.ai charts, Nu investor-relations slides, the reverse-DCF worksheet and the Quality Score table). Decorative images (product shots, executive portraits) and the "How to analyze stocks" 15-step infographic are noted in one line. A trailing "Best Buys Now" promotional image (monthly performance table) is transcribed at the end. Several internal inconsistencies between the prose and the images are flagged in the analysis page (LDR 58% in text vs 43% in the Q2 2025 chart; "NIM around 20%" vs a chart that plots Adjusted Net Income Margin; the forward-PE "10-year average" is a since-Dec-2023 average; the reverse DCF is labelled FCF but fed with net income less SBC).
Is Nu Holdings An Interesting Stock?
Have you ever heard about Nu Holdings?
It's a high-growth company that has disrupted the Big Five banks in Brazil.
Today, they are the largest digital banking platform in the world outside of Asia.
But is it an interesting stock? Let's find out.
[Image - photo: a purple Nu Mastercard held over banknotes.]
Nu Holdings - General Information
👔 Company name: Nu Holdings Ltd. (Nubank)
✍️ ISIN: KYG6683N1034
🔎 Ticker: NU
📚 Type: Owner-Operator
📈 Stock Price: $15.0
💵 Market cap: $72.5 Billion
📊 Average daily volume: $605 Million
Deep Dive
Steven Van Der Burg, an invaluable Partner in the Community, wrote a Deep Dive of 90 (!) pages on the company.
We will share the full investment case at the bottom of this article.
Nu Holdings is the perfect example of a growth stock.
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You can sign up for Compounding Growth here and immediately receive our 3 favorite growth stocks:
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15-Step Approach
Now let's use our 15-step approach to analyze the company.
At the end of this article, we'll give Nu Holdings a score on each of these 15 metrics.
This results in a Total Quality Score.
[Image - infographic "How to Analyze Stocks by Compounding Quality": the 15 steps - 1 Business model, 2 Capability of management, 3 Sustainable competitive advantage, 4 Attractiveness of the industry, 5 Main risks, 6 Balance sheet, 7 Capital intensity, 8 Capital allocation (ROIC), 9 Profitability, 10 Historical growth (revenue >5%, earnings >7%), 11 Usage of SBCs, 12 Outlook (revenue >5%, earnings >7%), 13 Valuation, 14 Owner's earnings (EPS growth + dividend yield, >10%/yr), 15 Historical value creation (CAGR since IPO).]
1. Do I understand the business model?
Nubank is a digital-first bank with no physical branches.
They started with a no fee credit card in Brazil to attract customers away from the high fees of big banks.
Today, they offer a full suite of services like savings accounts, personal loans, investments, and insurance.
Revenue Segments
Interest Income (86%): Earnings from credit card balances and personal loans.
Fee Income (14%): Commissions from interchange fees and premium services.
[Table image - Fiscal.ai chart "Nu Holdings Interest and Fee Income" (US$ millions, annual). Total / Interest income and gains on financial instruments / Fee and commission income: Dec '18: 318.9 total / fee 157.4 Dec '19: 612.1 / 337.9 (fee segment label) Dec '20: 737.1 / 382.9 (fee segment label) Dec '21: 1,698 / interest 1,046.7 / fee 651.3 Dec '22: 4,792.2 / interest 3,555.2 / fee 1,237 Dec '23: 8,029 / interest 6,439.7 / fee 1,589.3 Dec '24: 11,517.1 / interest 9,631 / fee 1,886 Dec '25: 15,774.7 / interest 13,434.7 / fee 2,340.1 LTM: 19,339.8 / interest 16,609.7 / fee 2,730.1 Legend: Interest income total change 10,181.20% (CAGR 78.4%); Fee and commission income total change 1,634.86% (CAGR 42.9%). Source: Fiscal.ai]
Products and Services
Nubank has a full range of banking products and services.
Once a customer starts using one of Nubank's offerings, they tend to adopt more of them over time.
Here's an overview of what they offer.
1. Nubank Credit Cards
[Image - product shot: five Nu Mastercard credit, debit and business cards.]
The no-annual-fee Mastercard launched in 2014. It was the first product from Nu.
It works as both a credit and prepaid card.
Customers manage everything in-app, including credit limit adjustments, instant locking/unlocking, and virtual card creation
By 2024, Nu reached over 60 million unique credit card customers in Brazil, representing about 34% of the adult population
Nu extended this model to small business owners with no-fee corporate cards and the ability to shift credit limits between personal and business accounts.
2. Personal Accounts (Digital Accounts)
[Image - product shot: Nu app screens (balance, rewards points, card statement).]
Known as NuConta in Brazil and Cuenta Nu in Mexico and Colombia, these accounts work as a checking/savings hybrid.
These are zero-fee accounts, with no monthly maintenance fees or minimum balance requirements
They're also high yield - balances earn interest automatically (100% of the CDI rate in Brazil or ~13% APR in Mexico) with instant liquidity
Nu has built a physical network through partnerships so customers can easily deposit or withdraw cash in their digital accounts. For example, in Mexico they patterned with OXXO stores, with 30,000+ locations
Cajitas (Money Boxes) are a popular feature that lets users to set aside money into sub-accounts for specific savings goals
3. Personal Lending
[Image - product shot: Nu Mexico personal-loan app flow; example MXN 12,000 loan, 12 monthly payments of 1,266.86, fixed monthly rate 3.33% ex-VAT, total annual cost 48.2% ex-VAT, total to pay 15,202.40.]
Nubank offers unsecured cash loans to customers through the app.
In Brazil, they've started to offer loans secured by investments, or other sources of income.
Unsecured Loans: Simple cash loans that pre-approved customers can simulate and receive instantly in their account through the app.
Secured Loans: Newer low-interest options in Brazil where loans are backed by investments, federal payroll deductions (Consignado), or severance funds (FGTS).
The total loan portfolio reached USD 24.1 billion by early 2025, a 40% increase year-on-year.
4. Business Accounts & Lending (Nu Empresas)
[Image - product shot: Nu business card and app.]
Nubank has built offerings for small and medium-sized businesses under its 'Nu Empresas' (Nu Business) accounts.
They function much like the personal accounts but are tailored for entrepreneurs to manage company finances.
Accounts designed specifically for sole proprietors and small companies can be opened in minutes via the app
No maintenance fees and free transfers (including Pix for enterprises)
NuTap is software that allows merchants to accept card payments directly on their smartphones without needing a separate card reader
Dedicated business loans launched in late 2024
5. Other Services
Investments (NuInvest): Zero-commission stock trading and access to government bonds and mutual funds
Crypto (NuCrypto): Allows users to buy and sell over 15 different tokens, including Bitcoin and Ethereum, with as little as BRL 1 (~$0.20)
Insurance (NuSeguro): Affordable, modular life, mobile phone, and home insurance policies managed entirely in-app
2. Is management capable?
Nubank is an Owner-Operator.
[Image - portrait: David Velez.]
David Vélez (CEO) founded the company in 2013 and is the largest shareholder.
He holds 75% of the voting rights, and 19% of the company.
[Image - portrait: Cristina Junqueira.]
Co-founder Cristina Junqueira (Chief Growth Officer) also holds a multi-billion dollar stake. She owns 4% of the company.
We love to see a founder still leading the company and management with skin in the game like this.
3. Does the company have a sustainable competitive advantage?
Nu's moat comes from its ultra-low cost structure and strong brand.
Because they have no branches and use modern cloud technology, it costs Nu less than $1 per month to serve a customer, while traditional banks spend over $4.
People love the brand so much that 80-90% of new customers join through free word-of-mouth referrals, which results in very low customer acquisition costs
Their Net Promoter Score is near 90, which is unheard of in banking.
Nu uses a proprietary credit engine (NuX) to analyze customer behavior in real-time. This allows them to safely lend to people that traditional banks often ignore.
All products are inside one app with a high-quality user experience. This makes it very easy for customers to manage their entire financial life in one place, creating low switching costs. It also makes it very easy for Nu to cross-sell products to existing customers.
Nu's advantages are obvious when we look at how fast the customer base is growing:
[Table image - Fiscal.ai chart "Nu Holdings Number of Customers" (millions, annual): Dec '17 3 · Dec '18 6 · Dec '19 20.1 · Dec '20 33.3 · Dec '21 53.9 · Dec '22 74.6 · Dec '23 93.9 · Dec '24 114.3 · Dec '25 131 · LTM 138.9. Total change 4,530.00% (CAGR 53.1%). Source: Fiscal.ai]
4. Is the company active in an interesting end market?
The retail profit pool in Brazil, Mexico, and Colombia is estimated at $140 billion.
These markets represent about 60% of Latin America's population and 66% of its GDP.
Most of these markets are still dominated by inefficient oligopolies with high fees, which should give Nu an attractive runway to keep growing.
5. What are the main risks for the company?
Here are the main risks of Nu Holdings:
Macro Sensitivity: High inflation or unemployment in Latin America could cause loan defaults to spike
Competition from MercadoLibre: Mercado Pago (MercadoLibre's fintech arm) is a big threat, especially in Mexico
Regulatory Risk: Governments could cap interest rates or change banking rules at any time
6. Does the company have a healthy balance sheet?
For Nubank, we don't use regular quality metrics like Interest Coverage or Net Debt/FCF.
These are great for most companies, but they don't work for banks.
Why don't we use the regular metrics?
Interest Coverage: Interest is usually a cost. For a bank, interest is income.
A bank's "cost" is what it pays depositors, and its "revenue" is the interest earned on loans.
Net Debt/FCF: In banks, we want to see a lot of "debt" in the form of customer deposits.
Using Net Debt to analyze a bank would make every bank in the world look like a terrible investment.
Goodwill/Assets: While important, it is less critical for Nubank because they grow mostly organically rather than through massive acquisitions.
Instead, we'll look at three metrics specific to banks.
1. Loan-to-Deposit Ratio (LDR): 58%
What it measures: This shows how much of the customers' deposit money the bank has lent out.
A lower ratio means the bank has plenty of cash if many people want to withdraw their money at once. Nubank's current 58% remains conservative.
[Table image - chart "EIP & LDR" (source: Nu Deep Dive). Quarterly EIP (bars, x 1,000,000 - i.e. US$ billions) / LDR (line) / EIP YoY %: Q1 2022: 3.1 / 25% Q2 2022: 3.2 / 24% Q3 2022: 3.5 / 25% Q4 2022: 4.0 / 25% Q1 2023: 5.2 / 33% / YoY 34% Q2 2023: 6.3 / 35% / YoY 45% Q3 2023: 6.7 / 35% / YoY 40% Q4 2023: 8.2 / 35% / YoY 37% Q1 2024: 9.7 / 40% / YoY 21% Q2 2024: 9.8 / 39% / YoY 11% Q3 2024: 11.2 / 40% / YoY 13% Q4 2024: 11.2 / 39% / YoY 12% Q1 2025: 13.8 / 44% / YoY 9% Q2 2025: 15.7 / 43% / YoY 10% (Numbers printed in European decimal convention, e.g. "15,7". The chart's latest LDR is 43%, not the 58% stated in the text.)]
2. Capital Adequacy Ratio (CET1): 20%
What it measures: This is a measure of permanent capital (equity and retained earnings) compared to risky assets
Regulators in Brazil usually require about 8.75%. Nubank has more than double the required amount, meaning it is extremely well-cushioned against losses.
3. Non-Performing Loans (NPL 90+): 6.8%
What it measures: The percentage of loans that are more than 90 days overdue.
Tells us if the bank is being too risky with its lending.
Nubank's ratio has been between 6% and 7%, which is healthy for a bank that focuses on people who are often ignored by traditional banks.
[Table image - Nu investor-relations slide "90+ NPLs": Q3'22 4.7% · Q4'22 5.2% · Q1'23 5.5% · Q2'23 5.9% · Q3'23 6.1% · Q4'23 6.1% · Q1'24 6.3% · Q2'24 7.0% · Q3'24 7.2% · Q4'24 7.0% · Q1'25 6.5% · Q2'25 6.6% · Q3'25 6.8%. Annotation: "Historical Q3 Seasonality +16 bps". Source: Nu Holdings Investor Relations]
Nubank has a very strong balance sheet with a lot of liquidity and a strong capital buffer.
7. Does the company need a lot of capital to operate?
Unlike traditional banks, Nubank is capital-light.
They have no expensive branches to maintain and their cloud-native platform scales cheaply.
Bankers use the efficiency ratio to measure how well the bank is managing overhead expenses.
The formula looks like this:
Efficiency Ratio = Operating Expenses ÷ Total Revenue
Nubank has an efficiency ratio of 27%.
This is much lower than the traditional banks, which run around 40% to 50%.
[Table image - Nu investor-relations slide "Efficiency" (US$ millions). Quarter: NII + F&C revenue / Costs / Efficiency ratio: Q2'22: 750.1 / (436.2) / 58.2% Q3'22: 847.0 / (466.4) / 55.1% Q4'22: 1,043.0 / (494.0) / 47.4% Q1'23: 1,178.5 / (460.0) / 39.0% Q2'23: 1,415.2 / (500.8) / 35.4% Q3'23: 1,599.1 / (560.1) / 35.0% Q4'23: 1,799.3 / (646.9) / 36.0% Q1'24: 2,075.2 / (665.9) / 32.1% Q2'24: 2,183.5 / (698.3) / 32.0% Q3'24: 2,182.2 / (684.3) / 31.4% Q4'24: 2,241.3 / (669.5) / 29.9% Q1'25: 2,351.5 / (581.7) / 24.7% (26.7% without one-off) Q2'25: 2,638.5 / (745.9) / 28.3% Q3'25: 2,896.9 / (802.0) / 27.7% Quarter-on-quarter FXN (FX-neutral) growth arrows annotated between bars. Source: Nu Holdings Investor Relations]
However, as they grow their loan book, they must hold back a larger portion of capital as a buffer to maintain a safe LDR and CET1.
8. Is the company a great capital allocator?
Capital allocation is the most important task of management.
Here's what things look like for Nu Holdings:
Return on Equity (ROE): 31.6% (ROE > 20%? ✅)
We don't look at ROIC for a bank.
Why? It doesn't tell us anything meaningful as customer deposits are debt, and the interest is income.
[Table image - Fiscal.ai chart "ROE" (Return on Equity, annual): Dec '19 -20% · Dec '20 -32.6% · Dec '21 -6.8% · Dec '22 -7.8% · Dec '23 18.2% · Dec '24 28.1% · Dec '25 30.3% · LTM 31.6%. Source: Fiscal.ai]
9. How profitable is the company?
The higher the profitability of the business, the better.
Here's what things look like for Nu:
Net Profit Margin: 42.8% (Net Profit Margin > 10%? ✅)
We'll add a few banking specific measures as well.
Net Interest Income (NII): the difference between the interest earned on Nubank's credit and loans, and the interest paid to customers on their deposits
Net Interest Margin (NIM): the profit margin between the earned interest and interest paid out to customer
Nu is growing its NII very quickly (>50% growth from 2023 to 2024).
The NIM around 20% is much higher than traditional banks, which tend to run around 3% to 4%.
[Table image - Fiscal.ai chart "Nu Holdings Ltd. (NU)": Net Interest Income (annual, US$ millions) bars and Adjusted Net Income Margin (annual) line. NII: Dec '18 116.1 · Dec '19 223.9 · Dec '20 269 · Dec '21 679.4 · Dec '22 2,007.3 · Dec '23 4,402.8 · Dec '24 6,796.2 · Dec '25 8,856 · LTM 11,131.4. Total change 9,484.69% (CAGR 76.9%). Adjusted Net Income Margin: Dec '21 -19.5% · Dec '22 (approx. -20%, unlabelled) · Dec '23 27.8% · Dec '24 18.9% · Dec '25 18.8%. (The line plotted is Adjusted Net Income Margin, not Net Interest Margin.) Source: Fiscal.ai]
10. Does the company use a lot of Stock-Based Compensation?
Stock-based compensation is a cost for shareholders and should be treated accordingly.
Preferably, we want SBCs as a % of Net Income to be lower than 10%.
Nu Holdings:
SBC of a % of Net Income: 9.8% (SBC/Net income < 10%? ✅)
[Table image - Fiscal.ai chart "Net Income and SBC" (annual, US$ millions). Share-based compensation / Net income attributable to common shareholders: Dec '18: 9.3 / -28.6 Dec '19: 18.5 / -90.8 Dec '20: 35.6 / -171.5 Dec '21: 157.3 / -165 Dec '22: 608.8 / -364.6 Dec '23: 212.6 / 1,030.5 Dec '24: 272.4 / 1,972.1 Dec '25: 271.8 / 2,868.9 LTM: 353.8 / 3,607.1 SBC total change 3,693.26% (CAGR 57.5%). Source: Fiscal.ai]
Management canceled a large award program in 2022 to limit dilution.
This shows they are shareholder-friendly.
11. Did the company grow at attractive rates in the past?
Nu is growing very quickly.
Revenue growth past 5 years (CAGR): 75.9% (revenue growth > 5%? ✅)
EPS growth past 5 years (CAGR): / (EPS growth > 7%? ❓)
Nu Holdings has only been profitable since 2023.
As a result it's impossible to calculate the EPS Growth over the past 5 years.
[Table image - Fiscal.ai chart "Revenue and EPS" (annual). Total revenues after provision for credit losses (US$ millions) / Diluted EPS: Dec '18: 154.9 / 0 Dec '19: 321.1 / -0.08 Dec '20: 453.7 / -0.13 Dec '21: 850 / -0.1 Dec '22: 1,839.4 / (approx. -0.07, unlabelled) Dec '23: 3,706.8 / 0.21 Dec '24: 5,513.2 / (approx. 0.41, unlabelled) Dec '25: 6,991.2 / (approx. 0.59, unlabelled) LTM: 8,442.1 / (approx. 0.73, unlabelled) Revenue after provisions total change 5,350.93% (CAGR 64.8%). Source: Fiscal.ai]
12. Does the future look bright?
Nu's plan is to go global.
They plan to launch in a new country outside Latin America by the end of 2025.
They are also expanding into the Southern US.
Let's look at what the estimates are:
Exp. Revenue growth next 2 years (CAGR): 32.4% (revenue growth > 5%? ✅)
Exp. EPS growth next 2 years (CAGR): 37.5% (EPS growth > 7%? ✅)
This outlook looks very attractive.
Now let's look at the valuation.
13. Does the company trade at a fair valuation level?
We always use three methods to look at the valuation of a company:
A comparison of the Forward PE multiple with its historical average
Earnings Growth Model
Reverse Discounted-Cash Flow
A comparison of the Forward PE multiple with its historical average
The first thing we do is compare the current forward PE with its historical average over the past 10 years.
This is a shortsighted method, but it already gives a quick indication.
Today, Nu trades at a forward PE of 16.4x compared to a recent average of 22.7x.
[Table image - Fiscal.ai chart "Forward P/E" for NU, Dec 2023 to Sep 2026: average 22.65 (dashed line); latest 16.19. Range roughly 34 (Aug-Sep 2024 peak) to about 13.7 (May-Jun 2026 low). Total change -27.38% (CAGR -11.3%). The average is computed from Dec 2023 only. Source: Fiscal.ai]
It's worth noting that Nubank trades at a much higher valuation than the traditional banks it competes against.
[Table image - Fiscal.ai chart "Forward P/E", Dec 2022 to Aug 2026, three lines: NU - latest 16.2 (total change -63.25%, CAGR -23.9%); started ~44, peaked ~66 in early 2023. ITUB4 (Itau Unibanco) - latest 8.7 (total change +29.32%, CAGR 7.3%); range roughly 6.5-11. BBDC4 (Banco Bradesco) - latest 6.3 (total change -18.24%, CAGR -5.3%); range roughly 5-10. Source: Fiscal.ai]
Earnings Growth Model
This model shows you the yearly return you can expect as an investor.
You can explore more about the Earnings Growth Model here.
Here are the assumptions I use:
EPS growth: 15% per year over the next 10 years
Dividend Yield: 0.0%
Forward PE: to remain flat
Expected yearly return = EPS Growth + Dividend Yield +/- Multiple expansion (contraction)
Expected yearly return = 15.0% + 0.0% + 0.0% = 15.0%
An expected yearly return of 15.0% is attractive.
This would mean you double your money every 5 years.
Reverse DCF
Charlie Munger once said that if you want to find a solution to a complex problem, you should invert. Always invert.Turn the problem upside down.
This is exactly what a reverse DCF does. As an investor, we don't make assumptions.
We look at what assumptions the market has made and see whether they are reasonable.
We'll use Net Income because FCF isn't the best measure for a bank.
The expected Net Income of the next 12 months equals $2,776 million.
We subtract the Stock-Based Compensation ($353.8 million) to arrive at Net Income in year 1 of $2,442.2 million.
The reverse DCF indicates that Nu's Earnings should grow by 14.8% each year for the next ten years.
These expectations could be reasonable based on how fast Nu has been growing.
[Table image - Reverse DCF worksheet. Inputs: current stock price 15.63 · shares outstanding (million) 4,800 · perpetuity growth rate 3.0% · desired return (discount rate) 10.00% · "FCF year 1 (million)" 2,442.20 · solved growth rate year 1-10: 14.79%. Cash flow estimates (labelled FCF), Year 1-10: 2,442.20 · 2,803.31 · 3,217.82 · 3,693.62 · 4,239.78 · 4,866.69 · 5,586.29 · 6,412.30 · 7,360.45 · 8,448.80 (growth 14.79% each year). Present values, Year 1-10: 2,220.18 · 2,316.79 · 2,417.60 · 2,522.79 · 2,632.57 · 2,747.12 · 2,866.65 · 2,991.39 · 3,121.55 · 3,257.38. Sum of discounted CFs 27,094.01. Terminal value 124,318.04; present value of TV 47,929.98. Total equity value 75,024.00. Intrinsic value per share 15.63. Upside/downside 0.00%. (Note: the worksheet price of $15.63 x 4,800m shares = ~$75.0bn, against the $15.0 / $72.5bn in the General Information block. Present value of the terminal value is ~64% of equity value.)]
Nubank:
Forward PE: 16.4x (lower than its 10-year average? < 22.7x? ✅)
Earnings Growth Model: 15.0% (Yearly return? > 10%? ✅)
Reverse DCF: 14.8% (Realistic growth expectations? ❓)
Nubank's valuation could be reasonable as long as it keeps growing at high rates, and the multiple doesn't come down significantly.
14. How did the Owner's Earnings evolve in the past?
Over time, stock prices tend to follow the Owner's Earnings of the company.
Owner's Earnings = EPS Growth + Dividend Yield
That's why we want to invest in companies that managed to grow their Owner's Earnings at attractive rates in the past.
Nu Holdings:
CAGR Owner's Earnings (5 years): / (CAGR Owner's Earnings > 12%? ❓)
Nu went from net losses ($165M in 2021) to serious profits (around $3.6B over the last 12 months).
But the company has only been profitable for 3 full years.
That's why we can't calculate the Owner's Earnings growth.
15. Did the company create a lot of shareholder value in the past?
We want to invest in companies that managed to compound at attractive rates in the past.
Ideally, the company has returned more than 12% per year to shareholders since its IPO.
Here's what the performance of Nu looks like:
YTD: -11.9%
CAGR since IPO in 2021: 9.1% (CAGR since IPO > 12%? ❌)
[Table image - Fiscal.ai chart "Nu Holdings Ltd. - Total Return", 09 Dec 2021 - 04 Sep 2026 (4y 8m): NYSE:NU total change +51.3% (CAGR 9.1%). Drawdown to roughly -60% by mid-2022 / early 2023; back above the IPO level from early 2024; peak roughly +110% in Jan 2026; +51.3% at 4 Sep 2026. Source: Fiscal.ai]
Quality Score
Finally, let's bring everything together and give the company a Total Quality Score.
As you can see in the table below, Nubank gets a Total Quality Score of 7.6/10.
[Table image - Quality Score table "By Compounding Quality - Nu Holdings (Nubank) - Owner-Operator": Business model - Nubank provides credit cards, accounts, and loans for personal and business customers; they have very low fees and costs - 8/10 Capability management - David Velez is the CEO and founder; insiders own a significant portion of the company - 9/10 Sustainable competitive advantage - Low cost: Nu can service a customer for 25% of the cost of a traditional bank; very strong brand and Net Promoter Score - 7/10 Attractiveness of the industry - Nu estimates the current market size is $140 billion; they're also expanding into new countries - 7.5/10 Main risks - Operating in emerging markets; unsecured loans - 6/10 Balance sheet - Nu has a very strong balance sheet; 58% LDR, 20% CET-1 - 9/10 Capital intensity - Nu is very capital light compared to traditional banks; Nu will have to retain more capital as their loan book grows - 6/10 Capital allocation - Capital allocation is the most important task of management; ROE: 31.6% - 8/10 Profitability - Nu has healthy profits; Net Profit Margin: 42.8% - 8.5/10 Usage of Stock-Based Compensation (SBCs) - SBCs are a cost for shareholders and should be treated accordingly; average SBCs as a % of Net Income past 5 years: 9.8% - 7/10 Historical growth - Nu has been growing quickly, but has limited history as a profitable company; Revenue CAGR past 5 years: 75.9% - 7.5/10 Outlook - The future still looks bright for Nu; expected Revenue and EPS growth next 2 years: 32.4% and 37.5% - 9/10 Valuation - The company trades at a forward PE of 16.4x (10-year average: 22.7x); Reverse DCF: Nubank should grow its FCF by 14.8% per year - 7/10 Evolution owner's earnings - Stock prices follow the Owner's Earnings of a company; Nu has only been profitable 3 years, so we don't have a 5-year CAGR - 7/10 Historical value creation - Nu doesn't have a very long history as a public company; CAGR since IPO: 9.1% - 7/10 Total Score - 7.6/10 (The fifteen scores sum to 114.5; 114.5 / 15 = 7.63.)]
The conclusion you can draw?
Nu Holdings is growing quickly
They operate at a world-class efficiency
High ROE
A capital light structure
But as Nu Holdings keeps growing, they will need to retain more and more capital.
The main risk probably is the competition from MercadoLibre's FinTech segment.
Want to dive deeper into Nu Holdings?
Steven Van Der Burg wrote a Deep Dive of 90 (!) pages on the company.
You can download it here:
Nu Holdings Deep Dive
You want to learn even more?
Grab our report with our 3 favorite growth stocks here:
3 Favorite growth stocks
Everything In Life Compounds Team Compounding Quality
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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[Table image - trailing promotional image "Best Buys Now" ("Each month on the 15th of the month I publish The Best Buys Now... These are the results of the Best Buys Now compared with the S&P 500 and the Nasdaq."). Month: Best Buys Now / S&P 500 / vs S&P / Nasdaq / vs Nasdaq: January 2026: -4.96% / 12.11% / -17.07% / 13.60% / -18.56% February 2026: 27.59% / 13.89% / 13.70% / 18.55% / 9.04% March 2026: 33.03% / 17.39% / 15.64% / 20.92% / 12.11% April 2026: 47.66% / 10.86% / 36.80% / 11.30% / 36.36% May 2026: 21.25% / 5.09% / 16.16% / 1.92% / 19.33% June 2026: 16.20% / 3.06% / 13.14% / 0.17% / 16.03% July 2026: 14.89% / 2.82% / 12.07% / 1.75% / 13.14% Average: 22.24% / 9.32% / 12.92% / 9.74% / 12.49% (Per-cohort returns since each month's publication, not calendar-month returns. The image appears twice on the page - after the intro and again at the foot - and is not referenced in the body text.)]