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Here’s why the Codan Limited share price bounced today

Shares of Codan Limited (ASX: CDA) have rebounded more than 12% today, climbing to 67.5 cents after hitting a high of 73 cents earlier. That compares to a 0.3% decline for the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO).

So What: Codan is a company that manufactures a range of products for global markets such as radio communications, mining technologies, and metal detection.

Today’s bounce came after the business announced its half-year results, including an 8% lift in net profit after tax (NPAT) to $6.1 million. The result was driven mostly by a 24% improvement in revenues from its metal detection business compared to the prior corresponding period (pcp).

However, revenues from communications products fell nearly 21% compared to the pcp to $29 million, and mining technology revenue was slightly lower at $2.3 million as well.

Now What: Although Codan’s shares are surging higher today, they’ve fallen sharply over the last six months. In fact, they’ve fallen almost 47% in that time and remain 83% below their peak in March 2013.

The company is forecasting another strong performance in the second half and expects a better underlying net profit compared to 2015’s result, which could see the share price recover some of its losses in the near term.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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