NU Expands Heavily in Brazil: Can It Replicate the Same in Mexico?

Nu Holdings Ltd. NU has already gained a foothold in Brazil, serving 60% of the adult population. It is trying to reiterate the Brazilian success in Mexico, leveraging the S-curve blueprint. Nu Holdings has successfully served around 14% of Mexico’s population as of the third quarter of 2025, way higher than Brazil’s 10% when it entered its inflection point in 2019.

It is really flattering how NU managed its average revenue per active customer (ARPAC) in Mexico to touch $12.5 in the third quarter of 2025, lingering close to Brazil, highlighting the strong unit economics of the credit card business. During the recent earnings call, CEO David Velez-Osomo pointed out Mexico’s higher ARPAC as the aggregated impact of its income per capita, which is 40% more than Brazil's, and the fact that 80% of customers carry a balance.

While the company registered record revenues of $4.2 billion in the third quarter of 2025, up 39% year over year on a foreign exchange-neutral basis, it managed to keep the cost to serve in Mexico under $1, which management considers to be significantly better than that of Brazil during its development, signaling operational efficiency. This low-cost structure supports its operations in segments where incumbent banks are incapable and averse to functioning, allowing the company to maintain compelling unit economics by lowering product prices.

A robust ARPAC and operational efficiency validate the strengthening of NU’s presence in Mexico, revealing its potential for sustained growth. We are highly optimistic about NU's expansion in Mexico on the back of the company’s profitability strategy, which prioritizes long-term investment and scale over short-term income.

NU’s Price Performance, Valuation & Estimates

The stock has jumped 28.8% in the past six months, outperforming the industry’s 27.2% growth. NU’s industry peers BNP Paribas BNPQY and Bank of Montreal BMO have gained 14.6% and 21%, respectively.

6-Month Share Price Performance

From a valuation standpoint, NU trades at a 12-month forward price-to-earnings ratio of 19.14X, which is significantly above the industry’s 11.38X. NU trades at a premium compared with BNP Paribasand Bank of Montreal’s 7.47X and 13.63X, respectively.

P/E - F12M

Nu Holdings and Bank of Montreal both carry a Value Score of D, whereas BNP Paribas carries an A.

The Zacks Consensus Estimate for EPS for 2025 is set at 60 cents, which has been revised 1.7% up over the past 60 days. The consensus mark for EPS for 2026 is pinned at 85 cents, which has been revised 2.4% down over the past 60 days.

NU currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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