Nu Holdings' Next Earnings Report on Aug. 13 Could Send the Stock Soaring. Here's Why.

Nu Holdings (NYSE:NU) is scheduled to report second-quarter earnings on Aug. 13 after the market closes. Expectations are high.

Wall Street analysts expect Nu to report quarterly sales growth of 49%. Earnings are expected to come in at $0.19 per share, though estimates range from $0.16 to $0.21 per share. Last year, second-quarter earnings totaled $0.12 per share.

Expectations for Nu’s sales and profit growth have been high for years. The fintech stock has rapidly grown its user base across Brazil, Mexico, and Colombia. More than half of all Brazilian adults are Nu customers. And roughly 15% of Mexican adults are now Nu customers, even though the company only entered that market in 2019.

Looking ahead, analysts expect 2026 sales growth of around 41%, with 2027 sales growth of 22%. Earnings per share for 2026 are expected to be $0.58, with 2027 EPS projected to be $0.81.

Despite rosy growth expectations, Nu stock is down 19% year-to-date. And while earnings aren’t necessarily the best metric to judge a bank stock by, shares trade at just 21 times trailing earnings and less than 17 times forward earnings.

If Nu announces strong earnings, shares could pop. And there’s one catalyst I’ll be paying most attention to.

Can Nu Holdings stave off rising competition?

Nu has an incredible growth history. Seismic growth was largely made possible by weak competition. When Nu launched in 2013, its competition in Brazil — its first market — consisted mostly of stodgy incumbents that charged customers high fees for relatively simple services. These incumbents had sprawling physical branch infrastructure and thus a high cost base.

Nu was founded as a digital-first bank. It has no branches. Instead, customers access their financial services directly from a smartphone. This allowed Nu to acquire customers faster and more cheaply than the competition could afford.

Image source: Getty Images

It took Nu a little over a decade to capture 100 million customers. And the competition took notice. Other fintech operators are growing quickly across Latin America, and analysts are increasingly concerned that Nu’s core markets have already reached saturation. Fears of market saturation and rising competition are arguably the biggest weight on shares, despite impressive top- and bottom-line growth.

But here’s the thing: Nu has proven an ability to stave off the competition on the metrics that matter most.

Nu’s monthly average cost to serve per active customer — a metric that tracks how expensive it is for the company to serve a customer — has remained around $0.80 per customer for the past five years. This proves that Nu’s cost advantage over the competition is structural and durable.

Nu has also demonstrated impressive underwriting discipline. Mercado Pago, perhaps its biggest fintech competitor, has stolen customers at the cost of sacrificing margins. Nu, meanwhile, has been able to add customers while maintaining or even growing profitability.

Despite repeated evidence of its business moat, the market remains skeptical of Nu’s ability to fend off competition in the long term. I expect another positive earnings report. But whether the market rewards continued progress remains to be seen. Whether or not shares pop after second-quarter earnings is anyone’s guess. But if shares remain pressured, patient growth investors looking to buy into a long-term growth story at a discount should take a closer look.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nu Holdings. The Motley Fool has a disclosure policy.