Financial Technology and Digital Banking took the United States from the storm in the last few decades. Now, the same trend is happening in Latin America, and it is the dominance of a company: Nu holdings ,New -1.34%,Online and mobile-focused banks are capturing millions of new customers to join their service in Brazil, Mexico and Colombia, disrupting the Stodi Legacy financial institutions with a better customer experience.
NU holdings, otherwise called NU Bank, have increased at an incredible speed in these emerging markets. Nevertheless the stock is more than barely than its IPO at the end of 2021. Here is the stock here a purchase before its next earning report on 14 August.
Increasing use in Brazil
In 2013, NU Bank launched an online bank by launching an online bank in Brazil with an easy-to-use smartphone application. Compared to the existing banks of the country, with their terrible customer experiences and high-on-two-rate loans, Nu Bank was a scene for the eyes of a sore throat, leading to rapid adoption in the nation. Since 2013, NU Bank has gone in Brazil, or more than half a population from the beginning of more than 100 million accounts.
In Brazil, the annual revenue of NU Bank will pass $ 10 billon this year. But the company is only starting in the nation. It has a major plan to invest its banking, loan, payment card and active customers to invest. The average revenue per company per active customer is $ 11.20 per month. Its earlier customers are now at a large level, and compared to assured institutions with an average monthly revenue per customer over $ 40, NU Bank has barely cracked the surface of its revenue-generating capacity in its home market.
Today at $ 10 billion in revenue, NU holdings have a chance to double their total annual sales in Brazil or even triple, even if it does not develop its customer’s count. It is a good place to be as a business, while innovating, while the inheritance banks have their inferior trade models.
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Rapid expansion in mexico
Brazil is beginning to mature as a market for NU Bank. In Mexico, the company has 11 million customers in a total population of about 130 million. With a similar position for Brazil, where the supporters have stodi systems that disappoint customers, Nu Bank has a green light to steal market share in Mexico. It only received its official banking license to work in Mexico, which would offer it to full loan and banking capabilities to offer its customers.
The average revenue per active customer in Mexico is less than Brazil, and NU is still in the initial innings of adding new customers to the platform. With this combination, NU Bank should be able to increase revenue in Mexico for many years. Today, compared to $ 700 million in revenue, I would not be surprised if Mexico becomes an annual revenue business of $ 10 billion for NU.
The company is not just staying in these two countries. It has entered the Colombian market, indicating with management that it plans to expand other countries – potential Argentina, Chile and Uruguay – within the next few years. While Colombia today has low revenue and is an economically a poor country than Brazil or Mexico, the rest of Latin America’s capacity is another positive place for NU Bank’s mission that tries to bring modern digital banking to the public.
Nu Net Income (TTM) Data by Ycharts.
Why Nu Holdings Stock is a purchase
NU is not only a fast growing company, it is also highly profitable. This generated returns on equity (ROE)) In the last 12 months, around 30%, which is an important metric for banking that measures net income that the business produces compared to its equity base, a measure of profit efficiency. The ROE of 30% is highly impressive for NU bank, especially when you believe the company is still getting stronger to grow. If it stopped its aggressive market and product expansion, the company would probably generate a single high Roe.
So what does NU bank earn? In the last 12 months, its net income was $ 2.15 billion, which gave the stock a follower Price-to-earning ratio (P/E) 30 of 30. At this stage, AP/E may take more for a bank, but some banks are growing rapidly as NU banks. In the last quarter, the revenue of the top-row increased year by 19%, with a lot of rooms to grow in Brazil, Mexico and Colombia, which enters the NU bank in the future, let any new market alone go into any new market. Earnings should also increase faster than revenue as the company acquires more economies of the scale and stops spending so much money to get new customers.
Add all this, and I think the p/e of Nu Holdings can fall rapidly at a cheap level, allowing the stock to buy and catch and hold and hold long -term before its upcoming income report in August.
