Nu Holdings: A Rather Promising Turn

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January draws to a close, and one finds oneself, as always, pondering the tiresome business of portfolio adjustments. One tires of the predictable successes, naturally, but a little speculation keeps the grey matter from complete atrophy. One hears so much about ‘momentum,’ as if the market were a particularly sluggish ballroom dancer. However, there are occasions when a certain… vim and vigour demands attention. And, frankly, Nu Holdings is presenting a most agreeable case.

This fintech concern, you see, has recently posted a return of 62% – a figure that, while not entirely unprecedented, is certainly not to be sniffed at. One suspects it’s poised for another rather good showing, and one is always partial to a bit of sensible optimism, wouldn’t you agree?

A Valuation That Doesn’t Require a Loan

After such a performance, the prudent investor – and one does pride oneself on prudence – naturally inquires about valuation. One simply must avoid overpaying for anything, darling. The market, as we know, has a distressing habit of changing its mind, and with alarming speed. A reasonable starting point is, therefore, essential.

As of the 29th, Nu shares are trading at a forward price-to-earnings ratio of 23.4. Quite acceptable, wouldn’t you say? Especially when one considers the following factors. It’s all terribly logical, really.

Growth That’s Almost Unseemly

One rarely encounters such robust growth in the financial services sector. It’s usually a rather staid and predictable affair, full of gentlemen in grey suits and tedious regulations. Nu, however, behaves more like a precocious start-up, which is rather refreshing, if one is being honest.

They collected $4.2 billion in revenue in the third quarter of last year, a 42% increase year-over-year. Analysts anticipate a 31% rise in revenue for this year, following a 37% gain last year. One begins to suspect they know something the rest of us don’t.

They’ve rather cleverly dominated the Brazilian market, with 110 million customers – more than 60% of the adult population. A truly impressive reach, wouldn’t you say? They also have a growing presence in Mexico and Colombia, with 13 and 4 million customers respectively. Expansion, it seems, is rather in the cards.

Latin America, you see, still possesses a significant population underserved by basic banking products. A rather untapped market, really. One can hardly blame Nu for capitalizing on it.

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Profits, Darling, Profits

Valuation and growth are all very well, but ultimately, one requires profits. And Nu, thankfully, delivers. Their business model eschews the expense of maintaining costly bank branches – a rather sensible strategy, one might add. This reduces operational overhead, naturally. They reported a net profit margin of 18.8% in the last quarter, a significant improvement from the 0.6% reported two years prior.

Delinquency ratios are, apparently, within acceptable parameters. And they generate considerably more revenue per customer than it costs to serve them. David Vélez, their CEO, rather smugly touts their “low-cost and highly efficient platform.” One can hardly disagree.

Between now and the end of the year, one anticipates another rather strong performance from Nu Holdings. It’s not a certainty, of course. Nothing ever is. But it’s a considerably more appealing prospect than most, wouldn’t you agree? And frankly, one could use a little bit of sensible optimism in this terribly tiresome world.

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2026-01-31 02:03