Stock Analysis

As Lucara Diamond (TSE:LUC) spikes 11% this past week, investors may now be noticing the company's three-year earnings growth

TSX:LUC
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Lucara Diamond Corp. (TSE:LUC) shareholders should be happy to see the share price up 11% in the last week. But that doesn't change the fact that the returns over the last three years have been disappointing. In that time, the share price dropped 62%. So it is really good to see an improvement. After all, could be that the fall was overdone.

While the stock has risen 11% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Lucara Diamond moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So given the share price is down it's worth checking some other metrics too.

Arguably the revenue decline of 11% per year has people thinking Lucara Diamond is shrinking. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
TSX:LUC Earnings and Revenue Growth July 25th 2025

We know that Lucara Diamond has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Lucara Diamond in this interactive graph of future profit estimates.

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A Different Perspective

Lucara Diamond shareholders are down 17% for the year, but the market itself is up 22%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Lucara Diamond is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Canadian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

About TSX:LUC

Lucara Diamond

A diamond mining company, engages in the development and operation of diamond properties in Africa.

Acceptable track record with mediocre balance sheet.

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