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.

Aaron Teboneras

Author bio Aaron Teboneras is an ASX investment writer with a background in business, marketing and finance. He has been a contributor to The Motley Fool since 2020, covering market news, company announcements, broker views and financial results. Aaron’s previous notable appointments include National Australia Bank, and Computershare where he discovered his passion for the Australian sharemarket. Aaron has been investing for almost 20 years, using both fundamental and technical analysis to find opportunities. Aaron completed a Technical Analysis course with Mint Analysis in 2022 and is currently studying Training and Assessment. Outside the market, he has travelled to more than 45 countries and enjoys trekking, meeting new people and seeing different parts of the world. Areas of expertise ASX growth shares Founder-led companies Company announcements and financial results Fundamental and technical analysis Education Bachelor of Business from RMIT University Social media LinkedIn Instagram Favorite investment quote “If you don't find a way to make money while you sleep, you will work until you die.” — Warren Buffett

Published December 16, 2020 2:20 pm AEDT

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.

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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.

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