TotalEnergies SE (TTE) Stock Should be on your Watch list, But be Prudent

Oil and gas stocks have a unique aptitude; they thrive when others suffer. Same is going by nowadays. With the confrontation between Russia and Ukraine on the rise, oil prices are skyrocketing across the globe due to supply constraints, leading to an outstanding increase in the price of oil and gas stocks. TotalEnergies SE (TTE) is not different. It is an integrated oil and gas company, headquartered in France and operationalizing in four main segments, including Exploration and Production, Integrated Gas and Renewables, Refining and Chemicals, and most crucial being Marketing & Services. The total market capitalization of TotalEnergies currently stands at $131.78 billion, with the stock enduring a change of 14.45% during a 52-week period. The beta value currently stands at 0.85. If the general sector-related trend holds any value, then for sure TTE would see the dominance of bulls till the geopolitical situation returns to normal.

What’s Going on for TTE?

TotalEnergies has been known in the industry for its brisk transition toward renewable sources of energy.  In its recent presentation, the company said that its goal is to deliver 35 Gigawatts of energy from the renewable resources of energy.

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TTE expects to deliver 35 GW of energy by 2025 (Source: Presentation by TotalEnergies)

In this regard, the company recently announced to collaborate with ENEOS Corporation for conducting a feasibility study to figure out the production of Sustainable Aviation Fuel in the Negishi Refinery of ENEOS. The refinery would have a capacity of 300,000 tons per year of Sustainable Aviation Fuel. Another step TotalEnergies has taken toward this goal of getting rid of non-renewables is to enter into a partnership with KGHM for participating in a tender by the polish government for the development of offshore wind projects. Both sides agreed to participate on a 50/50 basis in the partnership. As TotalEnergies has already got proven expertise in offshore operations, the company hopes that it would be better able to leverage its experience in this regard.

The stake of Institutional Investors

Institutional investment is an epitome of the strength of the stock, as it shows that the institutions are confident that the stock has the capability to provide them with solid returns going into the future. In the case of TTE, institutions hold 11.91% ownership of the company, which is quite a dismal number given the strength that TotalEnergies enjoy. However, the last 12 months have provided a glimmer of hope in this regard. The number of institutional buyers during the last 12-month period stood at 443, the combined effect of whom resulted in total inflows of $4.39 billion during the last 52-week period. On the contrary, the number of institutional sellers during the same period was 84, having a combined outflow of $160.1 million. The institution which invested most heavily was Fisher Asset Management LLC, having a stake of $1.23 billion.

TTE Short Interest Scenario

Short interest, being an indicator of market sentiment, could best describe what could happen with the stock in the future. Currently, traders have shorted 2,620,000 shares of TTE, which make up 0.10% of the total shares of the company. The short interest ratio of the company, which currently stands at 1, is depicting that positive sentiment has been associated with the stock. In a recent filing with the Securities and Exchange Commission, TotalEnergies has revealed that Cutler Group LP, Walleye Trading LLC, and some other institutional investors are shorting the maximum positions. During the last few months, TTE stock has seen a decrease in the short interest, with the total volume of shares being shorted standing at 2,620,000 shares on the 31st of March, a decline of 34.7% from the previous estimates of the volume of shares being shorted.

Revenue History

On the revenue front, TotalEnergies has always performed exceptionally. The company generated revenue of $55.3 billion during the fourth quarter of 2021, compared to $$54.73 billion it was able to generate in terms of revenue during Q3 2021, while the total revenues during the fourth quarter of 2020 stood at $37.94 billion. The total annual revenue for the fiscal year 2021 was estimated to be $205.86 billion versus the $140.68 billion it generated in terms of revenue during FY 2020. The revenue statistics are the epitome of the fact that the oil and gas sector was in the doldrums during 2020, owing to the COVID-19 pandemic’s impacts on industry, however, as the industry started to wake up in 2021, the demand for hydrocarbon resources saw a surge, which had a direct impact upon the performance of companies involved in oil and gas sector, including TotalEnergies. Looking ahead, the company, while providing an outlook for the fiscal year 2022, said that hydrocarbon production growth is expected to increase by 2% during the year, which in turn would positively impact its revenue generation.

EPS History & Estimates

EPS has always remained a high point for TotalEnergies. During the fourth quarter of 2021, TTE saw actual EPS of $2.55, while the consensus estimate was $2.06, meaning that the actual EPS beat consensus EPS by $0.49. The company is expected to announce the earnings results FOR the 1st quarter of 2022 on the 5th of May.  According to the analysts, the EPS for the quarter is expected to remain at $2.56. During the first quarter of 2021, the company’s EPS stood at $0.46.

Earnings estimates and actuals of TotalEnergies

Dividend Payment from TTE

TotalEnergies Dividend Yield since last few quarters

Dividends payment is an indicator of how much the company cares for its shareholders. The current dividend yield of TotalEnergies is 4.18%, which is an excellent figure given that most companies prefer to have a dividend yield of 2% to 4%. The total annual dividend of TTE currently stands at $2.14, while the company pats quarterly dividends to its shareholders.

Risks Associated with TTE

If you are considering that TTE is a stock worth investing in after reading this article, you are not wrong. From almost every angle, it seems the best time to invest in TotalEnergies for the longer term. However, several risks are also associated with the stock. Remember, oil and gas stocks are a mercurial investment. The decline of the oil and gas sector owing to the COVID pandemic shows that oil and gas stocks are not a stable investment. For a short period of time, they could provide excellent returns, but for a longer period of time, investment in them is not without any hazards. The same goes for TTE. Any company-specific or general market-related development could cause the stock to falter. Hence, investors should take cautious decisions while investing in TTE.

Final Remarks

A good stock has got this character that all of its technical indicators point toward a positive direction. The same is true for TTE. Almost all the indicators which are helpful in determining the sentiment, including EPS, Revenue, short interest, dividend payment, etc. are pointing in a positive direction. However, all that glitters is not gold. Some unforeseen risks are also associated with TTE stock, the consequences of which the investors should properly think about before investing in TTE.

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