• Wondering if Nu Holdings is still good value at around US$14.26, or if the easy gains are already behind it? This overview sets you up to judge the stock price with a clear, structured lens.
• The stock has returned 11.4% over the last year and a very large 3 year gain, even as the year to date move sits at a 16.2% decline, which can change how the market views both its growth potential and risk.
• Recent headlines have focused on Nu Holdings as a large listed Latin American digital bank, often highlighting its expanding customer base and ongoing product roll out across key markets. This backdrop helps frame why the stock has experienced strong multi year returns alongside more recent pullbacks.
• Right now, Nu Holdings carries a valuation score of 2 out of 6. The next sections will walk through what different valuation approaches say about that score, before finishing with a broader way to think about what the stock might be worth.

Nu Holdings scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Nu Holdings Excess Returns Analysis

The Excess Returns model looks at how much profit Nu Holdings is expected to earn on its equity above the return that shareholders require, then capitalizes those extra earnings into an estimated value per share.

For Nu Holdings, the starting point is a Book Value of $2.33 per share and a Stable EPS estimate of $1.34 per share, based on weighted future Return on Equity estimates from 14 analysts. The average Return on Equity is 33.23%, compared with a Cost of Equity of $0.45 per share. The gap between what the business is expected to earn and what shareholders require is the Excess Return of $0.90 per share, which is what this model focuses on.

The model also uses a Stable Book Value of $4.04 per share, sourced from weighted future Book Value estimates from 9 analysts, to anchor longer term expectations. Putting these inputs together gives an intrinsic value of about $15.91 per share. Compared with the recent share price of about $14.26, this implies the stock is 10.4% undervalued based on the Excess Returns approach.

Result: UNDERVALUED

Our Excess Returns analysis suggests Nu Holdings is undervalued by 10.4%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Nu Holdings Price vs Earnings

For a profitable company like Nu Holdings, the P/E ratio is a useful way to relate what you pay for each share to the earnings that support that price. It is a quick shorthand for how many years of current earnings the market is paying for the stock.

What counts as a “normal” P/E depends on how investors see the company’s growth potential and risk profile. Higher growth and lower perceived risk often line up with a higher P/E, while slower growth or higher perceived risk usually point to a lower one.

Nu Holdings currently trades on a P/E of 24.14x. That sits above the Banks industry average of 11.49x and above the peer average of 14.26x. Simply Wall St’s Fair Ratio for Nu Holdings is 17.61x, which is its proprietary view of what a balanced P/E could be once factors such as earnings growth, profit margins, industry, market cap and key risks are all taken into account.

Because the Fair Ratio is tailored to the company’s specific profile, it can be more informative than a simple industry or peer comparison. With a current P/E of 24.14x versus a Fair Ratio of 17.61x, the stock screens as trading above that Fair Ratio benchmark.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your Nu Holdings Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so think of Narratives as your way to connect Nu Holdings’ story to the numbers by spelling out what you believe about its future revenue, earnings, margins and fair value, then comparing that fair value to today’s price in a clear, visual way.

On Simply Wall St, Narratives sit inside the Community page and are designed so you can quickly set assumptions, see a forecast and arrive at a fair value without needing to build a spreadsheet. The platform then keeps that Narrative updated when new data such as earnings, regulatory news or analyst revisions is added.

For Nu Holdings, one investor might build a bullish Narrative around a fair value of about US$64.30 with higher revenue growth, wide profit margins and a future P/E above 30x. Another might build a far more cautious Narrative closer to US$15.98 with lower margins and a future P/E of about 17.5x. By setting both side by side against a recent share price near US$14 to US$15 you can decide which story you find more reasonable and how that lines up with your own buy or sell decisions.

Do you think there's more to the story for Nu Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.