Gem Diamonds (GEMD) AI Stock Analysis

• Market Cap: £3.88M
• Dividend Yield: N/A
• Average Volume (3M): 411.78K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.71
• Revenue Growth: -19.24%
• EPS Growth: -1347.92%
• Country: UK
• Employees: 716
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Other Precious Metals
• EPS (TTM): -0.07
• Shares Outstanding: 139,922,730
• 10 Day Avg. Volume: 236,749
• 30 Day Avg. Volume: 411,782
• PEG Ratio: -0.03
• Price to Book (P/B): 0.14
• Price to Sales (P/S): 0.13
• P/FCF Ratio: 0.85
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 63 Neutral
• Price Target: 3.00p ▼(-2.28% Downside)

The score is primarily supported by improving financial performance (profitability turning positive and free cash flow recovering strongly) and a stable leverage profile. It is held back by weak technicals (price below all major moving averages with negative MACD) and earnings-call signals of near-term operating strain (negative EBITDA, YoY revenue decline, impairment) despite ongoing cost actions and available liquidity.

Positive Factors

Free Cash Flow Recovery

Free cash flow swinging to +$23.14m demonstrates durable cash-generation improvement, giving management the ability to fund operations, service debt and maintain flexibility. Sustained positive FCF over months reduces refinancing risk and supports resilience through cycles.

Conservative Leverage

A low debt-to-equity ratio (0.18) and solid equity base provide structural financial flexibility. Combined with reported undrawn facilities and modest net debt, the balance sheet can absorb near-term shocks, support mine-plan adjustments and preserve optionality over the next 2-6 months.

High-Value Flagship Asset

The Letseng asset's focus on large, high-quality stones is a structural competitive advantage: outsized dollars-per-carat from a small number of stones can drive margins and cash conversion when prices recover, offering persistent upside versus lower-grade peers.

Negative Factors

Recent Revenue and EBITDA Weakness

A steep YoY revenue decline and a negative EBITDA position weaken durable profitability and constrain reinvestment. If industry pricing or demand remain depressed, these earnings shortfalls limit cash available for sustaining production and executing strategic initiatives over coming quarters.

Structural Market Headwinds

Trade barriers, sanctions and slower Chinese demand represent persistent, structural risks to global diamond trade. These factors can depress volumes and dollar-per-carat realizations for months, undermining revenue recovery and margin stability across the industry.

Goodwill Impairment & Concentration Risk

A full goodwill impairment signals reduced long-term cash-flow expectations and prior overpayment risk. Coupled with operational concentration (primary reliance on Letseng and limited asset diversity), this raises the company's exposure to single-asset shocks and reduces downside protection.

Gem Diamonds Business Overview & Revenue Model

Company Description

Gem Diamonds Limited operates diamond mines. The company's flagship project is the Letšeng mine located in the located in the Maluti Mountains of Lesotho. It is also involved in the production, manufacture, wholesale, retail, and marketing rough and polished diamonds. In addition, the company provides technical, financial, administrative, and management consulting services. It operates in Lesotho, Belgium, British Virgin Islands, Republic of South Africa, the United Kingdom, and Cyprus. The company was incorporated in 2005 and is headquartered in London, the United Kingdom.

How the Company Makes Money

Gem Diamonds generates revenue primarily through the sale of rough diamonds extracted from its mining operations. The company employs a revenue model that hinges on the value of the diamonds it produces, which is influenced by factors such as size, quality, and market demand. Key revenue streams include direct sales of diamonds to customers and diamond auctions, where prices are determined by bids from various buyers, including jewelers and manufacturers. Additionally, Gem Diamonds may enter into partnerships or joint ventures with other mining companies to enhance its operational capabilities and market reach. Market conditions, including fluctuations in diamond prices and demand from the luxury goods sector, significantly impact its earnings.

Gem Diamonds Financial Statement Overview

Summary

Gem Diamonds exhibits a solid financial performance with improvements across income, balance sheet, and cash flow metrics. Revenue growth and profitability margins are on an upward trajectory, while the balance sheet remains stable with controlled leverage. Cash flow management is notably strong, supporting operational stability. Nonetheless, recovering to pre-2020 revenue levels and enhancing profitability further could strengthen the company's financial position.

Income Statement

Gem Diamonds has shown a positive trend in revenue growth with a notable increase of 9.94% from 2023 to 2024. The gross profit margin improved to 27.76% in 2024, and the net profit margin turned positive at 1.88% from a loss in the previous year. The EBIT and EBITDA margins stand at 11.66% and 42.56%, respectively, indicating strong operational efficiency. However, the revenue has not yet returned to 2021 levels, suggesting room for further growth.

Balance Sheet

Gem Diamonds maintains a moderate debt-to-equity ratio of 0.18, reflecting prudent financial leverage. The return on equity (ROE) has improved to 2.03%, although it remains low, indicating limited profitability relative to equity. The equity ratio is at 40.83%, showcasing a stable financial structure with adequate equity to support assets. However, the decrease in cash and cash equivalents raises potential liquidity concerns.

Cash Flow

The company has demonstrated strong cash flow management, with free cash flow turning positive to 23.14 million in 2024 from negative in 2023. The free cash flow growth rate is significant, and the operating cash flow to net income ratio is robust at 17.69, indicating efficient cash generation relative to net income. Such performance highlights resilience in cash flow operations, despite past volatility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	121.54M	154.21M	140.29M	188.94M	201.86M	189.65M
Gross Profit	20.17M	42.81M	31.18M	44.50M	58.35M	56.00M
EBITDA	45.37M	65.63M	57.51M	38.56M	51.17M	53.60M
Net Income	-10.85M	2.89M	-2.13M	10.18M	14.77M	13.64M
Balance Sheet
Total Assets	350.10M	349.10M	384.71M	366.24M	384.62M	414.20M
Cash, Cash Equivalents and Short-Term Investments	6.79M	12.88M	16.50M	8.74M	30.93M	49.82M
Total Debt	38.60M	25.79M	44.52M	13.84M	15.87M	22.82M
Total Liabilities	130.39M	126.20M	166.59M	133.19M	137.97M	166.71M
Stockholders Equity	139.91M	142.58M	138.87M	152.62M	159.81M	163.07M
Cash Flow
Free Cash Flow	-10.30M	23.14M	-22.13M	3.16M	2.60M	47.49M
Operating Cash Flow	14.34M	51.20M	35.02M	63.03M	71.31M	96.23M
Investing Cash Flow	-24.30M	-27.64M	-57.15M	-59.67M	-68.69M	-48.72M
Financing Cash Flow	-13.68M	-26.73M	28.02M	-24.91M	-19.02M	-12.99M

Gem Diamonds Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.07
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:GEMD, the sentiment is Negative. The current price of 3.07 is above the 20-day moving average (MA) of 3.06, below the 50-day MA of 3.19, and below the 200-day MA of 5.45, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 35.15 is Neutral, neither overbought nor oversold. The STOCH value of 33.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:GEMD.

Gem Diamonds Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GEMD	63 Neutral	£3.88M	-0.46	-8.98%	―	-19.24%	-1347.92%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
BOD	44 Neutral	£2.64M	-2.75	―	―	―	―
KDR	44 Neutral	£982.18K	-3.13	-2.79%	―	―	23.81%
PDL	41 Neutral	£57.86M	-0.53	-70.13%	―	-45.11%	2.30%

Gem Diamonds Corporate Events

Gem Diamonds Reports Q3 2025 Trading Update with Increased Revenue

In its Q3 2025 trading update, Gem Diamonds reported a slight decrease in carats recovered and sold compared to the previous quarter, with 22,268 carats recovered and 22,830 carats sold. Despite this, the company achieved a higher average price per carat of $1,124, generating $25.7 million in revenue. The period saw the recovery of three diamonds over 100 carats, with a notable 319-carat diamond recovered post-period. The company has completed cash conservation measures, realizing savings of approximately $1.5 million monthly from September 2025, aligning with its revised guidance for the year.

The most recent analyst rating on (GB:GEMD) stock is a Hold with a £3.00 price target. To see the full list of analyst forecasts on Gem Diamonds stock, see the GB:GEMD Stock Forecast page.

Gem Diamonds to Release Q3 2025 Trading Update

Gem Diamonds Limited announced that it will release its Q3 2025 Trading Update on 30 October 2025, covering the period from 1 July 2025 to 30 September 2025. This update is anticipated to provide insights into the company’s operational performance and could impact its market positioning and stakeholder interests.

The most recent analyst rating on (GB:GEMD) stock is a Hold with a £3.50 price target. To see the full list of analyst forecasts on Gem Diamonds stock, see the GB:GEMD Stock Forecast page.