NU
Nu Holdings Ltd.
$12.73
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 8.6% above fair value
You pay
$12.73
Bear
$8.20
Fair
$11.72
Bull
$15.24
Bear
$8.20
-35.6%
ROTCE 20.0% → 2.74x TBV
Fair
$11.72
-7.9%
ROTCE 25.0% → 4.00x TBV
Bull
$15.24
+19.7%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (27.9%) vs. cost of equity (9.8%)
Implied Market Multiple
6.0x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $20.48 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $11.72 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $20.48 (from 22 analysts). Our estimate is 57% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly