Nu Holdings (NYSE:NU) is back in focus after Q2 2026 earnings, with record quarterly net income above US$1b, higher net interest income, and a customer base that has now passed 139 million across Latin America.

Nu Holdings shares currently trade at US$14.21 and the stock has slipped 16.5% on a year to date share price return. However, the 90 day share price return of 11.6% and 3 year total shareholder return of roughly 2x suggest longer term momentum remains stronger than recent trading implies.

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After a sharp pullback this year and a near 2x three year return, Nu Holdings sits in a tricky middle ground. Is most of the easy upside already in the rearview, or does the recent Q2 step change still leave room ahead?

Most Popular Narrative: 37.5% Undervalued

With Nu Holdings last closing at $14.21 against a narrative fair value of $22.74, the gap is wide enough that valuation is front and center.

The first is that Nu Holdings is currently trading at a historically low multiple relative to its growth profile. At $12.20 per share, the market is assigning it a 2026 forward P/E of just 13.7x based on an estimated earnings per share of $0.89, for a company growing that same earnings figure at roughly 48% annually. The 36% decline from its January highs ($18.98) has been driven by higher credit loss provisions in the first quarter and macroeconomic deterioration in Brazil, not by any change in the quality of the business model. That potentially creates an attractive entry window.

Curious what has to happen for Nu Holdings to reach that fair value? The narrative leans heavily on rapid revenue compounding, rising margins, and a premium future earnings multiple. The specific mix of growth, profitability and discount rate assumptions might surprise you.

Result: Fair Value of $22.74 (UNDERVALUED)

However, Nu Holdings still faces clear swing factors, including credit quality in Brazil and any renewed pressure on the Brazilian real, which could quickly challenge this valuation story.

Another View On Nu Holdings’ Valuation

The narrative model suggests Nu Holdings is undervalued at $14.21 against a $22.74 fair value. The picture looks different if you focus on the P/E ratio. At 19x earnings, NU trades above the US Banks industry on 11.8x and above a fair ratio of 18.7x. That premium can point to quality, but it also leaves less room for error if sentiment turns again.

Investors who prefer to anchor decisions on earnings multiples may want to stress test both the upside and the downside implied by that small gap to the fair ratio, and ask whether current credit risks and growth forecasts justify paying more than peers.

Next Steps

With mixed sentiment around Nu Holdings and its recent moves, it helps to test the data yourself and not rely only on any single narrative. To weigh the balance between concern and optimism, start with the 4 key rewards and 1 important warning sign

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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.