Lucara Diamond (TSX:LUC) - Share price, News & Analysis

Q: What is the Fair Price of LUC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

LUC (CA$0.61) is trading below our estimate of [[fair value]] (CA$9.01)

LUC fundamental analysis
Snowflake Score
Valuation	6/6
Future Growth	3/6
Past Performance	1/6
Financial Health	4/6
Dividends	0/6

LUC Stock Overview

Lucara Diamond Corp., a diamond mining company, focuses on the development and operation of diamond properties in Africa.

Rewards

Trading at 93.2% below our estimate of its fair value

Earnings are forecast to grow 33.23% per year

Became profitable this year

Risk Analysis

High level of non-cash earnings

Shareholders have been diluted in the past year

Lucara Diamond Competitors

Mountain Province Diamonds

TSX:MPVD

CA$111.8m

Avino Silver & Gold Mines

TSX:ASM

CA$81.0m

Eastern Platinum

TSX:ELR

CA$27.6m

Riverside Resources

TSXV:RRI

CA$9.3m

Price History & Performance

Summary of all time highs, changes and price drops for Lucara Diamond
Historical stock prices
Current Share Price	CA$0.61
52 Week High	CA$0.78
52 Week Low	CA$0.50
Beta	1.62
1 Month Change	-3.18%
3 Month Change	-7.58%
1 Year Change	-18.67%
3 Year Change	-60.39%
5 Year Change	-77.82%
Change since IPO	-32.22%

Shareholder Returns

	LUC	CA Metals and Mining	CA Market
7D	-6.2%	-5.8%	-0.8%
1Y	-18.7%	-18.2%	-5.0%

Return vs Industry: LUC matched the Canadian Metals and Mining industry which returned -18.2% over the past year.

Return vs Market: LUC underperformed the Canadian Market which returned -5% over the past year.

Price Volatility

Is LUC's price volatile compared to industry and market?
LUC volatility
LUC Average Weekly Movement	6.4%
Metals and Mining Industry Average Movement	11.1%
Market Average Movement	10.1%
10% most volatile stocks in CA Market	17.4%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: LUC is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: LUC's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1981	n/a	Eira Thomas	https://lucaradiamond.com

Lucara Diamond Corp., a diamond mining company, focuses on the development and operation of diamond properties in Africa. The company holds 100% interests in the Karowe mine located in Botswana. It also operates Clara Platform, a digital platform for the sale of rough diamonds.

Lucara Diamond Fundamentals Summary

How do Lucara Diamond's earnings and revenue compare to its market cap?
LUC fundamental statistics
Market Cap	US$214.23m
Earnings (TTM)	US$39.39m
Revenue (TTM)	US$245.18m

5.4x

P/E Ratio

0.9x

P/S Ratio

Is LUC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
LUC income statement (TTM)
Revenue	US$245.18m
Cost of Revenue	US$105.55m
Gross Profit	US$139.62m
Other Expenses	US$100.24m
Earnings	US$39.39m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 10, 2022

Earnings per share (EPS)	0.087
Gross Margin	56.95%
Net Profit Margin	16.06%
Debt/Equity Ratio	19.9%

How did LUC perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is LUC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LUC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for LUC. This is calculated by dividing LUC's market cap by their current preferred multiple.
What is LUC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$214.23m

LUC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.9x
Enterprise Value/EBITDA	2x
PEG Ratio	0.2x

Price to Earnings Ratio vs Peers

How does LUC's PE Ratio compare to its peers?

LUC PE Ratio vs Peers

The above table shows the PE ratio for LUC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	205.1x
MPVD Mountain Province Diamonds	0.4x	n/a	CA$111.8m
ASM Avino Silver & Gold Mines	154.4x	77.6%	CA$81.0m
ELR Eastern Platinum	7.8x	n/a	CA$27.6m
RRI Riverside Resources	657.9x	n/a	CA$9.3m
LUC Lucara Diamond	5.4x	33.2%	CA$276.7m

Forward PE

Price-To-Earnings vs Peers: LUC is good value based on its Price-To-Earnings Ratio (5.4x) compared to the peer average (205.1x).

Price to Earnings Ratio vs Industry

How does LUC's PE Ratio compare vs other companies in the CA Metals and Mining Industry?

Price-To-Earnings vs Industry: LUC is good value based on its Price-To-Earnings Ratio (5.4x) compared to the Canadian Metals and Mining industry average (10.5x)

Price to Earnings Ratio vs Fair Ratio

What is LUC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LUC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	5.4x
Fair PE Ratio	18.2x

Price-To-Earnings vs Fair Ratio: LUC is good value based on its Price-To-Earnings Ratio (5.4x) compared to the estimated Fair Price-To-Earnings Ratio (18.2x).

Share Price vs Fair Value

What is the Fair Price of LUC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LUC (CA$0.61) is trading below our estimate of fair value (CA$9.01)

Significantly Below Fair Value: LUC is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: LUC is good value based on its PEG Ratio (0.2x)

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Future Growth

How is Lucara Diamond forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

33.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: LUC's forecast earnings growth (33.2% per year) is above the savings rate (1.6%).

Earnings vs Market: LUC's earnings (33.2% per year) are forecast to grow faster than the Canadian market (7% per year).

High Growth Earnings: LUC's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LUC's revenue (5.4% per year) is forecast to grow slower than the Canadian market (6.5% per year).

High Growth Revenue: LUC's revenue (5.4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if LUC's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Lucara Diamond performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-42.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LUC has a high level of non-cash earnings.

Growing Profit Margin: LUC became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: LUC's earnings have declined by 42.9% per year over the past 5 years.

Accelerating Growth: LUC has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: LUC has become profitable in the last year, making it difficult to compare its past year earnings growth to the Metals and Mining industry (-6%).

Return on Equity

High ROE: LUC's Return on Equity (14.3%) is considered low.

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Financial Health

How is Lucara Diamond's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: LUC's short term assets ($125.0M) exceed its short term liabilities ($55.1M).

Long Term Liabilities: LUC's short term assets ($125.0M) do not cover its long term liabilities ($143.9M).

Debt to Equity History and Analysis

Debt Level: LUC's net debt to equity ratio (5.7%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if LUC's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: LUC's debt is well covered by operating cash flow (182.4%).

Interest Coverage: LUC's interest payments on its debt are well covered by EBIT (18.4x coverage).

Balance Sheet

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Dividend

What is Lucara Diamond current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate LUC's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate LUC's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if LUC's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if LUC's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: LUC is not paying a notable dividend for the Canadian market.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as LUC has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

4.4yrs

Average management tenure

CEO

Eira Thomas (53 yo)

4.42yrs

Tenure

US$1,717,912

Compensation

Ms. Eira Margaret Thomas, B.Sc., is the Founder and Strategic Advisor of Tectonic Metals Inc. and served as its Chairman till September 17, 2019. She is the Founder of Lucara Diamond Corp in 2007. She has...

CEO Compensation Analysis

Compensation vs Market: Eira's total compensation ($USD1.72M) is above average for companies of similar size in the Canadian market ($USD771.14K).

Compensation vs Earnings: Eira's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: LUC's management team is considered experienced (4.4 years average tenure).

Board Members

Experienced Board: LUC's board of directors are considered experienced (6.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 14.2%.

Data	Last Updated (UTC time)
Company Analysis	2022/07/03 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31