Brazil-based digital bank Nu Holdings (NU) prepares to report earnings for the third quarter late Wednesday as the country’s central bank accelerates it rate-hike cycle. Nu stock dipped in a buy zone intraday.
The upstart Brazilian fintech bank, founded in 2013, captured the attention of both Warren Buffett and Cathie Wood by delivering rapid and profitable growth. It touts itself as the fourth-largest Latin American bank by number of customers, 104.5 million reported at the end of Q2.
IBD named Nu as Stock Of The Day on Oct. 28 as it broke out to a post-IPO high.
Nu Earnings
For Q3, analysts expect the Brazilian “neobank” to deliver earnings of 11 cents per share, nearly doubling from six cents a year ago.
They see revenue growing 22%, year over year to $2.61 billion despite tough comparisons, according to FactSet. But that would mark the second straight quarter of slowing sequential top-line growth.
Going into the Q3 report, analyst project full-year earnings per share of 42 cents, a 75% increase from 2023.
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Nu Stock In Buy Range
The digital bank stock eased 0.4% in Wednesday’s stock market action, near the top of the buy range from a late-October breakout. On Tuesday intraday, Nu stock hit a post-IPO high at 16.15.
Nu stock regained a 15.16 buy point from a six-week, first-stage flat base on Oct. 15. It initially cleared that entry on Sept. 18, according to MarketSurge pattern recognition. The base rides neatly on support at the chart’s 50-day/10-week moving average.
The relative strength line for Nu stock shows an uptrend. It would be a positive sign to see that strength indicator reach new high ground along with Nu’s shares. A rising RS line means that a stock is outperforming the S&P 500 index.
Warren Buffett, Cathie Wood Own Brazilian Fintech
Founded in 2016, Nu Holdings says it uses data and technology to transform banking and empower people. The company serves more than 100 million customers across Brazil, Mexico and Colombia.
Reuters reported Nov. 7 that Brazil’s central bank has been raising interest rates at an accelerated pace, amid high inflation. Higher rates generally boost net interest income.
Nu, a fast-growing digital bank, saw wild swings after its U.S. initial public offering in December 2021. But it has delivered positive earnings every quarter since the third quarter of 2022, according to FactSet.
Both Warren Buffett and Cathie Wood own Nu stock, though they are very different types of investors. The fintech is a top-10 holding in Buffett’s equity portfolio. Wood also owns MercadoLibre (MELI), a Latin American online retail play.
Year to date, Nu stock has jumped 89% to a post-IPO high.
Last week, MercadoLibre stock plunged amid earnings. It remains below the 50-day line but is still up 23% in 2024.
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