This ASX 200 share hit an all-time high yesterday. Is the sky the limit?

Anyone who bought Codan Ltd (ASX: CDA) shares near their 52-week low of $25.18 would now be sitting on a gain of more than 100%.

And Wednesday gave shareholders another reason to be pleased, with the tech company’s shares climbing to a new all-time high of $53.16.

That surpassed the previous record of $51.76 set earlier in the week, with Codan finishing the session up 3.37% at $53.10.

The stock has now gained approximately 77% over the past year, with its recent rally pushing it further into record territory.

So, can Codan shares continue climbing from here?

What’s driving Codan shares higher?

Codan’s latest financial results provide some insight into why investors have been willing to pay more for the stock.

In its FY26 results, the company reported revenue of $875 million, up 30% on the previous year.

Net profit after tax (NPAT) jumped 69% to $175.2 million, while EBIT increased 67% to $244.1 million.

Its communications division delivered revenue of $506.2 million, up 22%, with segment profit climbing 45% to $156 million.

Demand for unmanned radio systems has been particularly strong, with revenue from this market more than doubling to approximately $215 million.

Meanwhile, Codan’s Minelab business benefited from higher gold detector demand and successful product launches.

Revenue increased 42% to $362 million, while segment profit jumped 65% to $162.4 million.

More growth to come?

The good news for shareholders is that Codan expects another strong year, with both divisions positioned to deliver further growth.

Its communications business is targeting revenue growth of approximately 20% in FY27, supported by continued demand for unmanned radio systems.

Management also expects the first half to be significantly stronger than the same period last year, giving the division a positive start to FY27.

Minelab should benefit from a full year of sales from its recently launched GPZ8000 and Gold Monster 2000 detectors.

Early FY27 trading has been positive, with Africa and other markets tracking broadly in line with the second half of FY26.

One thing worth watching, however, is the electronics supply chain, where emerging constraints could affect Codan’s ability to meet customer demand.

Is Codan getting too expensive?

While Codan’s growth has been impressive, I think valuation is becoming an important consideration after such a substantial rally.

At around $53 per share, the stock is trading on approximately 55 times its FY26 earnings per share of 96.5 cents.

That’s a lot to pay for last year’s earnings, despite how well the business has been performing.

And if the next update falls short of expectations, I wouldn’t be surprised to see some of those recent gains disappear.

I still like Codan’s exposure to defence communications and gold detection, but I’d be reluctant to chase the shares at current levels.

The post This ASX 200 share hit an all-time high yesterday. Is the sky the limit? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.