Stock Analysis & Valuation TotalEnergies SE (TTE.L)

• Previous Close: £61.10
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	41.40	-32
Intrinsic value (DCF)	33.26	-46
Graham-Dodd Method	21.50	-65
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

TotalEnergies SE (TTE.L) is a leading global integrated oil and gas company headquartered in Courbevoie, France. Operating across four key segments—Integrated Gas, Renewables & Power; Exploration & Production; Refining & Chemicals; and Marketing & Services—TotalEnergies is strategically positioned in both traditional and renewable energy markets. The company boasts a diversified portfolio, including LNG production, renewable electricity generation (wind, solar, hydro, and biogas), and a vast network of 16,000 service stations and 25,000 EV charge points. With a strong emphasis on sustainability, TotalEnergies has formed strategic partnerships with firms like PureCycle Technologies and Plastic Energy to advance circular economy initiatives. The company’s rebranding from TOTAL SE to TotalEnergies in 2021 underscores its commitment to energy transition. As of 2021, it held 12,062 Mboe of proved reserves, ensuring stable production capacity. TotalEnergies is a key player in Europe’s energy sector, balancing hydrocarbon profitability with investments in low-carbon solutions.

Investment Summary

TotalEnergies presents a compelling investment case due to its balanced exposure to traditional oil & gas and growing renewable energy segments. The company’s diversified revenue streams, strong cash flow generation (€30.9B operating cash flow in FY 2023), and commitment to shareholder returns (dividend of €3.33/share) are attractive. However, risks include exposure to volatile oil prices (beta of 0.7) and regulatory pressures tied to energy transition. Its strategic pivot toward renewables and LNG positions it well for long-term sustainability, but execution risks and capital intensity (€14.9B in capex) remain key considerations. Investors should weigh its stable dividend yield against sector-wide decarbonization challenges.

Competitive Analysis

TotalEnergies competes in the global integrated energy market by leveraging its scale, diversified operations, and early-mover advantage in renewables. Unlike pure-play oil majors, its integrated gas and renewables segment (21% of 2023 revenue) provides a hedge against hydrocarbon volatility. The company’s 25,000 EV charge points and partnerships in advanced recycling (e.g., PureCycle) differentiate it in energy transition. However, it trails Shell and BP in renewable capacity but outperforms in LNG infrastructure. Its refining margins benefit from European supply constraints, though competitors like ExxonMobil have superior chemical integration. TotalEnergies’ French base grants regulatory stability but limits growth versus emerging market-focused peers. Its debt-to-equity (0.43) is healthier than BP’s, supporting transition investments. The key competitive edge lies in its balanced portfolio—maintaining cash cows (Exploration & Production) while scaling renewables (8% CAGR targeted).

Major Competitors

• Shell plc (SHEL.L): Shell leads in LNG volumes and renewable investments (e.g., 45,000 EV charge points vs. TotalEnergies’ 25,000). Its trading division generates superior margins, but higher leverage (debt-to-capital ~30%) constrains flexibility. Shell’s broader geographic footprint in Asia-Pacific gives it an edge in demand growth markets.
• BP plc (BP.L): BP is more aggressive in renewables (50GW target by 2030 vs. TotalEnergies’ 35GW) but has weaker LNG integration. Its higher breakeven oil price (~$40/bbl) makes it more vulnerable to downturns. BP’s US shale assets provide upside but add volatility.
• ExxonMobil Corporation (XOM): ExxonMobil dominates chemicals and upstream efficiency (lowest production costs among majors) but lags in renewables. Its US focus shields it from European regulatory risks but limits global gas exposure. Exxon’s AA credit rating surpasses TotalEnergies’ A+, enabling cheaper capital.
• Chevron Corporation (CVX): Chevron’s Permian Basin dominance and low-carbon intensity (79% lower than peers) are strengths, but its renewable portfolio is underdeveloped. Its Gorgon LNG project competes with TotalEnergies’ global LNG network. Chevron’s higher FCF yield (8% vs. 6%) appeals to income investors.
• Equinor ASA (EQNR.OL): Equinor excels in offshore wind (4.6GW capacity) and low-carbon hydrogen but lacks downstream integration. Its state backing ensures stability but limits shareholder returns. Equinor’s European renewables focus overlaps with TotalEnergies, though it has less exposure to Africa/LNG.