TotalEnergies (ENXTPA:TTE): Valuation Check After 21-Year Renewable Power Deal With Google

TotalEnergies (ENXTPA:TTE) just locked in a 21 year deal to supply Google’s Malaysian data centers with solar power from its upcoming Citra Energies plant, a long term contract that underlines its shift toward cash flows driven by renewables.

See our latest analysis for TotalEnergies.

Deals like the Google PPA, plus recent asset sales and upstream portfolio tweaks, are landing against a backdrop where the latest share price of $55.43 sits on modest positive momentum, with a mid single digit 90 day share price return and a much stronger multi year total shareholder return profile suggesting the long term transition story is still being rewarded.

If this kind of energy transition story has your attention, you might also want to see which other names are showing up in fast growing stocks with high insider ownership.

With shares still trading at a double digit discount to analyst targets despite resilient earnings growth, are investors underestimating the value of these long dated renewable contracts, or is the market already pricing in the next leg of growth?

Most Popular Narrative: 12.4% Undervalued

With TotalEnergies last closing at €55.43 versus a most popular narrative fair value of about €63.30, the valuation case leans toward mispriced long term cash flows.

The company's disciplined divestment of higher cost, higher carbon, and non operating legacy assets, combined with redeployment of capital into lower cost, lower emission, higher return projects, improves capital efficiency and CFFO per barrel, likely resulting in ongoing improvements in cash flow and return on equity.

Read the complete narrative.

Curious how modest top line growth can still justify a higher valuation? This narrative leans on fatter margins, richer multiples, and shrinking share count. Want to see how those ingredients combine into that upside target?

Result: Fair Value of €63.30 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, prolonged weak oil prices or structural downstream overcapacity, especially in petrochemicals, could compress margins and derail the optimistic cash flow narrative.

Find out about the key risks to this TotalEnergies narrative.

Build Your Own TotalEnergies Narrative

If you see the story differently or want to stress test your own assumptions, you can build a personalized view in just minutes, Do it your way.

A great starting point for your TotalEnergies research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Ready for more investment ideas that match your style?

Do not stop at one opportunity. Use the Simply Wall St Screener to uncover targeted stock ideas that others may only notice later.

• Broaden your search for early stage potential by scanning these 3636 penny stocks with strong financials that already support their stories with solid fundamentals.
• Explore the AI shift by reviewing these 24 AI penny stocks that combine innovation with financial metrics you can evaluate.
• Create a value focused shortlist from these 914 undervalued stocks based on cash flows so you can see which cash rich names the market still treats as secondary.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com