JPMorgan Chase (JPM +1.82%) is a leading financial institution that has its hands in all areas of the industry, from investment banking and capital markets to consumer banking and asset management. Its shares have been a big winner, producing a total return of 156% in the past five years (as of Jan. 26).
There is a key reason to press pause on the top banking entity, though. Should investors looking to put money to work in the financial services industry consider buying Nu Holdings (NU 0.11%) instead?
Image source: JPMorgan Chase.
JPMorgan Chase stock is understandably expensive
It's clear that JPMorgan Chase's stock is not exactly the cheapest opportunity in the market these days. Shares trade at a price-to-book (P/B) ratio of 2.4. That's about 33% more expensive than its five-year average. And it's 75% higher than money-center rival Bank of America. The valuation, in my opinion, is enough of a reason for investors to be patient.
It makes sense why the market is so bullish. JPMorgan Chase is a high-quality business, demonstrated by its solid financial metrics.
NYSE: JPM
Key Data Points
Last quarter (Q4 2025 ended Dec. 31), it reported 7% year-over-year revenue growth. The company is extremely profitable as well, posting a fantastic net profit margin of 31% last year. This clearly showcases management's focus on proper risk management and operational discipline, critical traits to have in this industry.
Nu shares provide investors with sizable upside
The better investment opportunity right now appears to be Nu Holdings. It's a thriving digital bank that has a strong position in Brazil, where its 110 million customers represent 60% of the country's adult population. It's also building a budding presence in its other two markets, Mexico and Colombia.
Because Nu is not mature like JPMorgan Chase is, it's reporting impressive growth. Revenue soared 42% year over year in Q3 (ended Sept. 30). Latin America is a developing region, so the population doesn't have comprehensive access to the same financial products and services that are available in the U.S. Nu is trying to change that.
NYSE: NU
Key Data Points
While Nu's Q3 net margin of 19% isn't at the same level as JPMorgan Chase's, the trajectory of the earnings base is encouraging. Analysts expect earnings per share to grow 178% between 2024 and 2027.
Nu's P/B multiple of 8.3 is astronomically higher. But if you view the stock's more compelling forward price-to-earnings ratio of 22.5, it's not as scary a situation. Plus, Nu's on pace to be a much larger bank in five years compared to what it is today. That presents greater upside for investors.
