Shares of Nu Holdings NU have dipped 28.2% in the past six months against the industry’s 11.5% rally.
Nu Holdings’ revenues in 2026 and 2027 are expected to increase 39.2% and 22.9% year over year, respectively. Earnings are anticipated to rise 35.5% in 2026 and 37.4% in 2027.
Factors That Augur Well for NU’s Success
Customer Growth & Market Leadership: Nu Holdings added nearly 4 million customers in the first quarter of 2026, leading the total to exceed 135 million globally. Banking on this massive addition of customers, the company found itself as the largest private financial institution in Brazil and expanded swiftly to become the third largest in Mexico.
Nu Holdings' monthly average revenue per active customer reached approximately $16, continuing the unbroken streak of sequential quarter-over-quarter growth. It highlights the company’s ability to not only attract more customers but also to strengthen its relationship with users.
Efficiency in Core Operations: Nu Holdings recorded a low efficiency ratio of 17.6% in the first quarter of 2026 compared with the preceding quarter’s 19.9%, which highlights operational efficiency, citing revenues growing faster than costs. The primary driver of this growth is the adoption of high-margin credit and leading products that enhance monetization.
Nu Holdings utilized its digital native infrastructure that scales users at a near-zero marginal cost to serve. Moreover, NuFormer optimized corporate expenses and accelerated testing cycles to reduce fixed expenses as the business scaled.
Strong Capital Efficiency: In terms of profitability, the current position looks highly appealing due to lofty income. Currently, NU’s return on equity stands at 30.9%, outpacing the industry’s 13%. In terms of return on invested capital, Nu Holdings is at 13.4%, significantly surpassing the industry average of 4.5%. It signals management’s ability to generate true economic profit, which is a green flag for investors.
Risks Faced by Nu Holdings
Elevated Delinquency & Credit Loss Allowances: The 15-90-day non-performing loan ratio moved up 5% year over year in the first quarter of 2026. Management needs to monitor risks closely despite the anticipation of first-quarter seasonality and intentional risk-taking. In the first quarter of 2026, provisions and credit loss allowances were at $1.8 billion, up 33% quarter over quarter. This substantial growth demonstrates the widening credit volume and product mix inclining toward high-risk segments.
Weak Liquidity: NU’s current ratio (a measure of liquidity) at the end of the first quarter of 2026 was pegged at 0.58, lower than the industry average of 0.87. A current ratio of less than 1 does not bode well with investors as it indicates a company’s inability to pay off short-term obligations.
NU’s Zacks Rank & Stocks to Consider
The company has a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Finance sector are Bread Financial BFH and Cboe Global Markets CBOE, each currently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bread Financial has a long-term earnings growth expectation of 10%. BFH delivered a trailing four-quarter earnings surprise of 154.3%, on average.
Cboe Global Markets has a long-term earnings growth expectation of 16.8%. CBOE delivered a trailing four-quarter earnings surprise of 5.4%, on average.
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This article originally published on Zacks Investment Research (zacks.com).