A strong performer from today's afternoon trading session is TotalEnergies SE, whose shares rose 3.0% to $59.02 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
TotalEnergies SE's Earnings and Assets May Be Undervalued:
TotalEnergies SE, a multi-energy company, produces and markets fuels, natural gas, and electricity in France, rest of Europe, North America, Africa, and internationally. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 7.54 and an average price to book (P/B) ratio of 1.68. In contrast, TotalEnergies SE has a trailing 12 month P/E ratio of 7.2 and a P/B ratio of 1.25.
When we divide TotalEnergies SE's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -0.48. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
The Business Has Weak Operating Margins:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $176,249 | $119,704 | $184,634 | $263,310 |
| Gross Margins | 25.1% | 16.7% | 28.4% | 31.0% |
| Operating Margins | 9.2% | -5.3% | 13.4% | 19.2% |
| Net Margins | 6.39% | -6.05% | 8.68% | 7.8% |
| Net Income (MM) | $11,267 | -$7,242 | $16,032 | $20,526 |
| Net Interest Expense (MM) | -2,324 | -1,886 | -1,302 | -880 |
| Net Interest Expense (MM) | -$2,324 | -$1,886 | -$1,302 | -$880 |
| Depreciation & Amort. (MM) | -$16,401 | -$22,861 | -$14,343 | -$13,680 |
| Earnings Per Share | $4.17 | -$2.9 | $5.92 | $8.21 |
| EPS Growth | n/a | -169.54% | 304.14% | 38.68% |
| Diluted Shares (MM) | 2,618 | 2,602 | 2,694 | 2,426 |
| Free Cash Flow (MM) | $12,875 | $4,039 | $18,067 | $31,677 |
| Capital Expenditures (MM) | -$11,810 | -$10,764 | -$12,343 | -$15,690 |
| Net Current Assets (MM) | -$68,724 | -$80,368 | -$67,323 | -$63,570 |
| Current Ratio | 1.21 | 1.23 | 1.17 | 1.15 |
| Long Term Debt (MM) | $47,773 | $60,203 | $49,512 | $45,264 |
| Net Debt / EBITDA | 0.98 | 2.58 | 1.05 | 0.48 |
TotalEnergies SE has growing revenues and increasing reinvestment in the business and low leverage. Additionally, the company's financial statements display a strong EPS growth trend and generally positive cash flows. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a positive growth rate. Finally, we note that TotalEnergies SE has just enough current assets to cover current liabilities.
