Why the Codan (ASX:CDA) share price is surging 5% higher today

The Codan Limited (ASX: CDA) share price is up 5% higher today after the company announced robust trading results. Let's take a look.

| More on:
positive asx share price represented by lots of hands all making thumbs up gesture

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Codan Limited (ASX: CDA) share price is surging higher after the company announced a robust trading performance for the first 4 months of the 2021 financial year.

At the time of writing, the Codan share price is up 4.9% to $10.05. The S&P/ASX 200 Index (ASX: XJO) is also having a strong day today, currently up 1.3% at 6,718 points.

Codan designs and manufactures a range of electronic products and software to governments, businesses, aid and humanitarians, and customer markets. The company's 3 main products are radio communication, metal detection, and tracking solutions.

What's driving the Codan share price higher?

In today's release, Codan advised that demand has been strong for its metal detectors, in both recreational and mining markets .

Management noted that an array of internal changes led to the company achieving growth. This included the expansion into new geographical areas, increased distribution into retail channels, and investment in its manufacturing capacity.

Codan said the positive result has offset its tactical communications business which is significantly down this year.

In light of this, the board expects a net profit after tax of $40 million for the first-half of the 2021 financial year.

While it stopped short of making second-half projections, the group believes a stronger period awaits. This comes as the company is gearing up to launch its new packed detector in the third quarter of FY21.

In addition, the company has an order book of more than $30 million in its communications business due in the second half of FY21.

Codan share price summary

The Codan share price has been a solid performer over the past 5 years, reflecting gains of more than 1,300%. Patient shareholders who kept hold for that period would have effectively turned every $1,000 invested into $13,000. Indeed, Codan has comfortably blown away the S&P/ASX 200 Index, which has a 31% return over the same timeframe.

Codan has a market capitalisation of $1.8 billion and a price-to-earnings (P/E) ratio of 28.6.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Senior man wearing glasses and a leather jacket works on his laptop in a cafe.
Broker Notes

Should I still swap my CSL for CBA shares or has the market corrected?

The two stocks have travelled opposite directions this month.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

woman holding 'hiring' sign in shop
Broker Notes

Can you guess whether Macquarie prefers REA Group, CAR Group or SEEK shares?

Which ASX online classifieds business offers the best investment opportunity today?

Read more »

An ASX shares broker analysing a chart tracking the A2 Milk share price
Share Market News

Are these two struggling ASX materials shares undervalued?

Are these buy-low candidates?

Read more »

Female miner smiling in front of a mining vehicle as the Pilbara Minerals share price rises
Broker Notes

Expert says this ASX All Ords small cap mining stock could rocket 38%

Big upside ahead?

Read more »

Happy man working on his laptop.
Share Market News

5 things to watch on the ASX 200 on Wednesday

It looks set to be another good session for Aussie investors tdaoy.

Read more »

Two laughing young women hold shopping bags and ride an escalator up to another level in a Scentre Group shopping centre.
Broker Notes

3 ASX consumer sector shares to buy in July: expert

A leading expert has named its top 3 picks.

Read more »