Welcome to Compound & Fire, where we’re on a mission to build wealth the smart way. Hunting for top-quality businesses that grow shareholder value over the long haul, paving the road to financial freedom and early retirement.
This community is free, but if you’re enjoying the deep dives and want to support more content, you can treat me to a coffee on Buy Me a Coffee. Every bit helps keep the fire burning, and I’m truly grateful for your support! Let’s grow this journey together and join the conversation on our free Global Quality Investing Discord App and subscribe to my Substack for free if you haven’t yet!
Hello, fellow quality investors!
In the ever-evolving landscape of quality investing, tools like the Compound & Fire Quick Scan provide a streamlined way to assess a company's investment readiness. The Investment Readiness Score is a composite metric that evaluates key areas: balance sheet health, profitability, growth consistency, and shareholder value creation. A score above 80% typically flags a company as a strong candidate for deeper analysis, highlighting its ability to compound value over the long term with minimal risk. Today, we're pitting two fintech giants against each other: Nu Holdings (Nubank), the disruptive digital bank from Latin America, and Intuit, the established leader in financial software. Let's dive into their Quick Scans to see how they stack up.
NU Holdings: Quick Scan
For a better picture of the Quick Scan click here. The calculation of the IRS score is available in our Discord app
Summary: Nu Holdings, operating as Nubank, is a digital banking powerhouse primarily targeting underserved markets in Latin America. It offers credit cards, savings accounts, personal loans, investments, and insurance through a user-friendly mobile app, leveraging technology to disrupt traditional banking with low fees and high accessibility. With a market cap of $65.6 billion, 4.8 billion shares outstanding, and an average daily volume of 64.2 million, Nubank demonstrates strong liquidity and growth potential. Its Investment Readiness Score of 90.3% reflects excellent capital efficiency, robust profitability growth, and shareholder-friendly practices, making it a compelling quality play in emerging fintech.
Highlights:
Net Debt / EBITDA: -4.4 (Final Score: 100/100) – Exceptional balance sheet strength with net cash position.
Intangibles / Assets: 1.53% (99.0/100) – Minimal goodwill reliance, indicating organic growth.
Capex / Sales: 1.58% (93.7/100) – Efficient capital allocation with low reinvestment needs.
Return on Invested Capital: 17.06% (82.7/100) – Solid returns on capital, though room for improvement in a high-growth phase.
OCF / Net Income: 122% (90.4/100) – Strong cash conversion, exceeding earnings.
Gross Margin: 45.93% (82.0/100) – Healthy margins for a fintech bank.
Net Profit Margin: 17.76% (81.1/100) – Improving profitability amid rapid scaling.
Revenue 10YR CAGR: 82.55% (100/100) – Explosive growth, outpacing peers.
SBC / Revenue: 2.45% (90.2/100) – Reasonable stock-based compensation.
Changes in Outstanding Shares: 6.00% (87.8/150) – Moderate dilution.
Ownership Management: 22.03% (86.8/100) – Significant insider alignment.
Intuit: Quick Scan
For a better picture of the Quick Scan click here. The calculation of the IRS score is available in our Discord app
Summary:
Intuit Inc. is a global leader in financial management software, powering tools like TurboTax for tax preparation, QuickBooks for small business accounting, Credit Karma for personal finance, and Mailchimp for marketing automation. Headquartered in the U.S. with a market cap of $184.78 billion, 278.9 million shares outstanding, and an average daily volume of 1.7 million, Intuit benefits from a subscription-based model and AI-driven innovations. However, its Investment Readiness Score of 78.3% is weighed down by high intangibles from recent acquisitions like Credit Karma and Mailchimp, which have caused ROIC to drop significantly in recent years, from around 35% in 2019 to 14.82% currently, as the company integrates these assets and expands its ecosystem.
Highlights:
Net Debt / EBITDA: 0.6 (Final Score: 95.8/100) – Low leverage, solid financial health.
Intangibles / Assets: 52.17% (50.4/100) – High due to acquisitions, potentially inflating the balance sheet.
Capex / Sales: 0.66% (97.4/100) – Highly efficient, asset-light model.
Return on Invested Capital: 14.82% (79.0/100) – Declined post-acquisitions but still respectable.
OCF / Net Income: 160% (100/100) – Excellent cash generation.
Gross Margin: 80.76% (93.6/100) – Premium software margins.
Net Profit Margin: 20.55% (82.2/100) – Strong profitability.
Revenue 10YR CAGR: 18.55% (89.0/100) – Consistent double-digit growth.
SBC / Revenue: 10.45% (50.9/100) – Elevated, a common tech sector issue.
Changes in Outstanding Shares: 7.20% (85.6/150) – Manageable dilution.
Ownership Management: 2.30% (36.8/100) – Lower insider ownership.
The Big Picture: Investment Readiness Check
Both companies excel in fintech innovation, but their profiles differ markedly. Nu Holdings shines with hyper-growth (82.55% 10-year revenue CAGR) and a pristine balance sheet, earning a superior 90.3% Investment Readiness Score. This reflects its agility in capturing Latin America's digital banking boom while maintaining efficiency and high insider alignment. Intuit, on the other hand, offers stability and market dominance but scores lower at 78.3%, primarily due to acquisition-driven intangibles and a ROIC decline from strategic buys like Credit Karma ($7.1B in 2020) and Mailchimp ($12B in 2021). These moves expanded its ecosystem but temporarily diluted returns as integration costs and goodwill ballooned invested capital. While Intuit's mature margins and cash flow are enviable, Nu's momentum in an underserved region gives it an edge in compounding potential.
The Verdict
In this head-to-head, Nu Holdings emerges as the winner. Its higher Investment Readiness Score, explosive growth, and cleaner balance sheet position it as the superior quality investment for long-term compounders seeking high-upside opportunities in emerging markets.
Winner: NU Holdings
But is the market telling a different story? Let’s explore.
Market Reality Check: FCF Yield
To ground my analysis in valuation, let's compare each company's free cash flow (FCF) yield to the 10-year U.S. Treasury yield (currently around 4.23%). This quick check helps gauge if the stock offers a compelling "equity bond" alternative.
For Intuit, the FCF yield stands at approximately 3.27%. This is below the Treasury yield, suggesting the stock may be fully valued or pricing in premium growth expectations. Investors are paying up for its stability.
For Nu Holdings, recent financial analysis highlights a strong free cash flow (FCF) performance. The trailing twelve months (TTM) FCF per share is $0.78 as of March 2025, translating to approximately $3.7 billion in total FCF based on 4.8 billion shares outstanding. With a market cap of around $65.6 billion, this yields an FCF yield of about 5.7%, comfortably exceeding the current 10-year U.S. Treasury yield of 4.23%. This robust cash generation, paired with impressive growth, underscores Nu's attractive valuation, and might provide a solid margin of safety for quality investors seeking long-term value. But this is still based on a quick scan. A deep dive should confirm this quick analysis.
Join the Quality Edge!
Which of the two companies aligns with your strategy? How do you look at both Quick Scans and valuations? Share your thoughts in the comments below or join the debate on my Global Quality Investing Discord.
Share this article
If you enjoyed reading my article, feel free to share it with friends:
Disclaimer
The information in this article is provided for informational and educational purposes only.
The information is not intended to be and does not constitute financial advice or any other advice, is general in nature, and is not specific to you. Before using this article’s information to make an investment decision, you should seek the advice of a qualified and registered securities professional and undertake your own due diligence.
None of the information in this article is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund. The author is not responsible for any investment decision made by you. You are responsible for your own investment research and investment decisions.
If you zoom out, the contrast is striking for me: Intuit is the definition of a compounder that has already compounded: sticky ecosystem, enviable margins, but you’re buying it at a premium multiple with FCF yield below Treasuries. That’s basically paying for safety.
Nu Holdings, on the other hand, is where the asymmetry lives: 80%+ revenue CAGR over a decade, pristine balance sheet, insiders holding real skin in the game, and now throwing off a 5.7% FCF yield. That combination is rare in emerging markets: hyper-growth + actual cash compounding. Great post.
Your standard check like Net Debt/EBITDA does not work for banks. I think to have to adapt them when analysing banks/fintech.