Nu Holdings Ltd. (NU)
Servicios financieros digitales — Latinoamérica
Nu is the largest digital bank in Latin America —131 million customers at year-end 2025 and 139 million as of June 2026— with a cost to serve that the company itself estimates at roughly 85% below traditional Brazilian banks, a deposit base originated entirely through organic channels, and a return on tangible equity well above the 10% bar. There is a margin of safety: the market's perception is meaningfully worse than reality. At the market price the stock returns +17% annually over five years: Very undervalued.
- Price
- $14.80
- Intrinsic value (5y, base)
- $32
- Total annual return (5y)
- 16.6%
- Status (nominal)
- Very undervalued
- Margin of safety
- +42%
The essentials
- 131 million customers at year-end 2025 (113 million in Brazil, close to 62% of the adult population) and 139 million as of June 2026; the activity rate is 83.4%.
- Revenue grew 37% in 2025 to US$15,775 million and net income to common grew 45% to US$2,869 million; the return on tangible equity is 26%.
- Funding is local-currency deposits originated organically: US$41,925 million at year-end 2025 and US$45,328 million as of June 2026.
- The price factors in the Brazilian credit cycle: the 90+ day delinquency ratio reached 6.6% in December 2025 and 6.9% in June 2026.
Intrinsic value — two valuation methods
By both methods, the value today (DCF $37 · Multiples $26) exceeds the market price ($15).
Pillars of the analysis
The verdict — today vs 5 years
Today — with margin of safety: at $15 trades ~42.2% below its value discounted to today (~$26) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.
At 5 years — Muy infravalorado: the target price ($32) plus dividends yield above the required average return (10%) — the business compounds.
The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.
Thesis
The business
A digital lender with a return on tangible equity of 26.3%, well above the 10% bar, an efficiency ratio of 19.5% in the second quarter of 2026, and a low-cost deposit base originated organically. Quality is not in question: what is being paid for is the duration of growth.
The valuation
Equity is valued on earnings per share and an exit multiple, the metric for a lender. The base path starts from 38% revenue growth —an analyst normalization just below the 39% constant-currency figure the company disclosed for the second quarter of 2026, not the 50% reported in dollars— and decelerates to 16% by year five, with net margin moving from 18.2% to 20.8%. A multiple of 15 times, the top of the archetype's band, is applied to that terminal earnings figure.
The margin of safety
At $15 per share the estimated five-year value is $32, an annual return of +17%. The adverse scenario —a contraction in the Brazilian credit cycle and multiple compression to 11 times— returns +17% annually, and the favorable scenario +17%. The entry point cheapens on its own if the business compounds: the entry multiple of 25× compresses sharply over the horizon.
What to watch
The disconfirming test is portfolio quality. If the 90+ day delinquency ratio keeps rising from the 6.9% of June 2026 while the portfolio grows at 37%, expected loss eats into the 12.4% risk-adjusted financial margin and the earnings path does not hold. The second test is the exchange rate: the growth reported in dollars leans on the real, and that tailwind can reverse.
Educational / informational. Does not constitute investment advice.