Dyno Nobel shares (ASX: DNL) were the second best performer on the ASX 200 on Thursday, adding 7.77% to close at A$4.16 after briefly touching a decade-high of A$4.19 intraday.
The latest move was decisive, with the DNL share price powering through the A$4.00 resistance level that had capped the stock in each of the past three months, aswell as back in 2022. Having increased the YTD gain to 29.91%, the question now is what comes next.
Technical traders expect breakouts above multi-year resistance levels of this nature to trigger buying from momentum-oriented funds, as well as short covering.
Fundamental Support Remains Strong
The immediate catalyst for yesterday’s move was a positive investor update in which Dyno Nobel reaffirmed its FY26 earnings guidance. Management confirmed that the company remains on track to deliver Net Profit After Tax (NPAT, excluding one-off items) of between A$325 million and A$340 million for the full year, while reiterating confidence in its longer-term strategic ambition to reach A$600 million in EBIT by FY28.
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For markets that had harboured lingering scepticism about whether the company’s transformation could deliver on its promises, the explicit reaffirmation of near-term and medium-term targets provided meaningful earnings visibility.
The numbers underpinning that confidence are hard to argue with. In its half-year results for H1 FY26, Dyno Nobel reported group EBIT growth of 39.3% year-on-year to A$242.7 million, while NPAT excluding individually material items surged 83.3% to A$160.9 million. Return on Invested Capital expanded to 9.5%, a meaningful step toward the company’s stated longer-term ROIC targets and a figure that re-rates the business in the eyes of capital-efficiency-focused institutional funds.
Growth is being driven across both its North American and Asia-Pacific operations, with the mining sector’s sustained demand for blasting services providing a durable revenue base.
Capital Returns Offer Helping Hand
Alongside the operational improvements, Dyno Nobel’s capital management program has been a persistent structural support for the share price. The company is executing an A$900 million on-market share buyback program, of which more than A$558 million has already been deployed.
The buyback reduces the share count, mechanically accreting earnings per share even in the absence of top-line growth, and creates a consistent institutional-scale buyer in the market. An interim dividend of 4.6 cents per share has also been distributed, with an annual yield of ~2.4%.
What Lay Ahead
Bulls will point to FY26 guidance of A$325–340 million in NPAT, whilst the FY28 EBIT target of A$600 million implying meaningful further earnings growth. The buyback provides ongoing EPS accretion and price support, whilst the technical picture, with the stock now trading above a decade-long resistance level, opens the door to further price discovery with limited overhead supply.
Bears can take some comfort in the fact the stock is at the upper end of analysts price targets, which have generally clustered in the A$3.30 to A$4.20 range. Operationally, the company faces scheduled plant turnarounds at facilities including Moranbah and Cheyenne, which carry execution and outage risk that could weigh on near-term production and costs if not managed smoothly.
Plenty to debate as the year progresses towards the final quarter, although for now at least, bulls have been getting the upper hand.
