Is TotalEnergies (ENXTPA:TTE) a Bargain Opportunity Amid Energy Transition and Valuation Discrepancies?

The energy transition has reshaped the landscape of the oil and gas sector, creating both challenges and opportunities for industry leaders. TotalEnergies (ENXTPA:TTE) stands at a crossroads, balancing its traditional hydrocarbon operations with a bold push into renewables and low-carbon technologies. For investors, the question is whether the company's current valuation reflects its long-term strategic potential-or if it represents a mispricing that could be exploited.

Valuation Metrics: A Tale of Contrasts

TotalEnergies' valuation metrics in late 2025 suggest a significant discount relative to industry peers. The company trades at a price-to-earnings (P/E) ratio of 9.7x, far below the oil and gas industry average of 13.3x and peer average of 21.4x. Its enterprise value-to-EBITDA (EV/EBITDA) ratio of 4.9x is similarly low, compared to the US Oil and Gas industry average of 8.7x. These figures imply that the market is pricing TotalEnergies at a steep discount to its fundamentals, potentially offering a margin of safety for long-term investors.

The price-to-book (P/B) ratio, though less explicitly stated for TotalEnergies, further underscores this trend. The US Energy sector's P/B ratio stood at 1.32 as of December 2025, while TotalEnergies' equity appears to trade at an even lower multiple, suggesting undervaluation of its asset base. Analysts have noted that such discrepancies often arise when markets underappreciate a company's strategic direction or future cash flow potential.

Strategic Positioning: Bridging Fossil Fuels and Renewables

TotalEnergies' 2025 strategy is a dual-edged sword: it aims to grow its core oil and gas operations while accelerating its transition to low-carbon energy. The company plans to increase electricity production to 100–120 terawatt-hours annually by 2030, with 70% from renewables and 30% from flexible gas according to company strategy. This aligns with a broader ambition to achieve carbon neutrality by 2050.

Key investments include $4 billion annually in low-carbon projects, such as solar, wind, and hydrogen as part of its sustainable investments, and a $7.5 billion cost-saving program to fund these initiatives as detailed in 2025 strategy. Recent acquisitions, like 50% of Clearway Energy and Core Solar, have added 4 GW to its renewable portfolio according to company features, while offshore wind projects in the US are expected to power 1.3 million homes as reported by Reuters. These moves position TotalEnergies as a leader in integrated power generation, a sector projected to grow at 20% annually through 2030.

Critics argue that the company's expansion in gas-fired power generation-such as its joint venture with EPH- risks deepening fossil fuel dependence. However, TotalEnergies frames gas as a "transition energy," emphasizing its role in balancing renewable intermittency while reducing methane emissions by 50% by 2025. This balanced approach may appeal to investors seeking resilience in a volatile energy market.

Financial Performance and EBITDA Growth

Recent financial results validate TotalEnergies' operational strength. Q3 2025 adjusted EBITDA reached $10.3 billion, up from $9.7 billion in Q2, driven by 4% year-on-year hydrocarbon production growth. The Exploration & Production segment generated $2.2 billion in adjusted net income for the quarter, while the Integrated Power segment is on track to become free cash-flow positive by 2028 as stated in company outlook.

Looking ahead, TotalEnergies projects 3% annual oil and gas growth through 2030, supported by high-margin LNG projects in the US, Brazil, and Uganda according to market analysis. Meanwhile, its renewable energy capacity is expected to triple to 100 GW by 2030 as outlined in energy outlook, with a target return on adjusted capital employed (ROACE) of 12% in the Integrated Power segment according to future projections. These metrics suggest a transition strategy that prioritizes profitability without sacrificing growth.

Expert Analysis and Analyst Consensus

Discounted cash flow (DCF) models highlight a stark valuation gap. One analysis estimates TotalEnergies' intrinsic value at €182.72 per share, implying a 69.6% undervaluation relative to its late-2025 price of €53.95. Another DCF model places intrinsic value at €202.38, a 72.8% discount. Analysts have also set a consensus target price of €63.44–63.57, well above the current price, while the company's P/E ratio of 9.7x remains below the sector average of 14.3x.

However, risks persist. Infrastructure constraints and cost overruns in renewable projects could delay profitability, and regulatory shifts may accelerate the phase-out of fossil fuels. Yet, TotalEnergies' diversified strategy-combining LNG, renewables, and gas-offers a buffer against these uncertainties.

Conclusion: A Mispricing Worth Considering

TotalEnergies' valuation metrics, strategic investments, and financial performance collectively paint a compelling case for undervaluation. While the market appears to discount its energy transition ambitions, the company's disciplined capital allocation and dual focus on hydrocarbons and renewables position it to navigate the transition profitably. For investors with a long-term horizon, the current price may represent a rare opportunity to capitalize on a mispricing that could correct as the energy landscape evolves.