Yahoo Finance We Might See A Profit From Nu Holdings Ltd. (NYSE:NU) Soon
We feel now is a pretty good time to analyse Nu Holdings Ltd.'s (NYSE:NU) business as it appears the company may be on the cusp of a considerable accomplishment. Nu Holdings Ltd. operates as a digital financial services platform and technology company primarily in Brazil, Mexico, and Colombia. On 31 December 2022, the US$22b market-cap company posted a loss of US$365m for its most recent financial year. As path to profitability is the topic on Nu Holdings' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Nu Holdings
Nu Holdings is bordering on breakeven, according to the 11 American Banks analysts. They expect the company to post a final loss in 2022, before turning a profit of US$370m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 54%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Nu Holdings given that this is a high-level summary, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 16% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Nu Holdings which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Nu Holdings, take a look at Nu Holdings' company page on Simply Wall St. We've also put together a list of essential factors you should further examine:
Valuation: What is Nu Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Nu Holdings is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nu Holdings’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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