Despite having a market cap of more than $50 billion, Nu Holdings (NU -6.87%) might not be a familiar business to many investors in the U.S. That's because its operations are in Brazil, Mexico, and Colombia.

The company's shares have been volatile since their initial public offering in December 2021. However, they have soared 180% in the past 24 months. This is true even though there's been a 26% drop since November.

Nu trades for less than $12 a share. Does this make the fintech stock a smart buying opportunity today?

Growing at a brisk pace

Like other banks, Nu offers customers a wide range of financial services, like checking and savings accounts, credit cards, personal loans, insurance, and investments. And there's also a service called Ultraviolet that caters to high-income customers that offers cash back on purchases and certain travel benefits.

But unlike most other banks, Nu operates fully digitally -- it doesn't have any physical bank branches. This allows management to emphasize technology as a key strategic pillar, with a focus on building a great user experience.

The result has been tremendous growth, which continues today. Nu has added customers to its platform at a remarkable pace. It ended last year with 114 million customers, up 470% from five years ago. Economic development in Latin America helps, with higher smartphone and internet penetration providing a favorable backdrop for digital banking services to rise in popularity.

Unsurprisingly, revenue growth is also through the roof. Between 2019 and 2024, the top line increased by almost 19-fold. Wall Street believes revenue will grow by 129% during the next three years.

This outlook is believable. More than half of all adults in Brazil -- its home market -- are Nu customers. In Mexico and Colombia, the business has a lower penetration rate because it's been operating there for a shorter period of time. And there's potential in new countries. Chief Executive Officer David Vélez said Nu could enter a new market within the next couple of years.

Impressive profitability

With businesses growing as quickly as Nu is, you typically see large net losses. The expectation is to generate positive net income sometime in the distant future at a higher sales base.

Nu stands out from the crowd. In 2024, it posted a stellar 17.1% net profit margin. That represents a stark improvement from the 12.8% margin reported the year before. Average analyst estimates forecast earnings per share rising 172% between 2024 and 2027, so the bottom line could continue its positive trajectory.

One key reason Nu is so lucrative is due to strong unit economics. In other words, the company is making money from each customer that it serves. Average revenue per active customer was $10.70 in Q4, up 23% year over year in constant currency. On the other hand, the average cost to serve per active customer was only $0.80.

Nu is seeing cross-selling opportunities that can boost the revenue it makes from every customer. And as it scales up and focuses on operational efficiencies, the cost to serve each customer has a chance to improve.

Nu stock's valuation

Since hitting a peak in November last year, Nu shares are down 26%. General market volatility deserves some blame. The stock also took a huge hit when it reported Q4 2024 results on Feb. 20 that disappointed the market.

However, the company's revenue growth and profitability are solid, as discussed. And investors can buy the stock right now at a forward P/E ratio of just over 21. This valuation is in line with the overall S&P 500's (^GSPC -5.97%) multiple.

In my opinion, the market is offering up a sweet deal on Nu shares. The stock looks like a smart buy, as it trades for less than $12.