Nu Holdings Stock Analysis: Buy or Sell? | NU Stock Analysis

SUMMARY

Parkev Tatevosian, CFA, analyzes Nu Holdings' recent stock performance, highlighting both its credit risk challenges and its attractive valuation. Despite downgrades from major banks and rising default rates, he maintains a buy rating based on the company's cash flow position and undervalued stock price.

MAIN POINTS

• Nu Holdings' share price declined by 24% in 2026 and remains flat over the previous year, prompting investor questions about buying opportunities. [0:00]
• Major investment banks, including Bank of America, Citigroup, and Susquehanna, downgraded Nu Holdings due to leadership changes and rising credit default rates. [1:03]
• Nu Holdings faces higher loss rates on defaults compared to markets with stronger property rights, making credit risk a significant concern. [2:00]
• The company's operating cash flow to sales ratio has remained strong at around 41% since 2022, though cash flow remains volatile and management-dependent. [3:01]
• Nu Holdings' forward price-to-earnings ratio has dropped to 13.9, near historical lows, as investor sentiment shifts toward AI and Southeast Asian markets. [4:00]
• Despite valuation challenges and sector risks, the analyst reiterates a buy rating for Nu Holdings as of June 16th, 2026, citing undervaluation and long-term prospects. [6:01]

DETAILED ANALYSIS

Nu Holdings, a Latin American financial services and lending company, has experienced a notable decline in its share price, falling 24% year-to-date in 2026 and remaining largely unchanged over the previous year. This underperformance stands in contrast to broader market gains, leading to increased scrutiny from investors. Several major investment banks, including Bank of America, Citigroup, and Susquehanna, have downgraded the stock, citing concerns over leadership changes and rising credit default rates.

The company has seen an uptick in borrowers who are 30, 60, and 90 days late on their loans, a worrying trend in markets where property rights are less robust and recovery rates on defaults are lower than in more developed lending environments.

Despite these challenges, Nu Holdings maintains a strong operating cash flow to sales ratio, which reached 41% in 2022 and has remained stable for the past four years. This metric is particularly important for lending companies, as cash flow can be highly volatile depending on lending activity and repayment rates. Management has the ability to adjust lending practices to manage cash flow, and the company is not currently facing a liquidity crunch.

In terms of valuation, Nu Holdings' forward price-to-earnings ratio has dropped to 13.9, a level not seen since January 2025, making the stock appear attractive relative to its historical pricing. Investor sentiment, however, has shifted away from Latin American markets toward sectors benefiting from the artificial intelligence boom, particularly in Southeast Asia, contributing to the stock's depressed valuation.

A discounted cash flow analysis suggests that Nu Holdings is undervalued, with the stock trading near its 52-week low of $11.20 and well below the analyst's calculated fair value of approximately $23.70. While the inherent difficulty of valuing financial and lending companies—due to the complexity of their debt and cash flow structures—means that such valuations should be viewed with caution, the current market price presents a potential buying opportunity. As of June 16th, 2026, the analyst reiterates a buy rating, emphasizing the company's resilient cash flow and attractive valuation despite ongoing sector risks.

LINKS

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