Decarbonization And Hydrogen Will Drive Global Megaproject Expansion

Key Takeaways

• Scaling of proprietary technologies and consulting, along with modularization, is driving margin outperformance and positions the company for sustained profit growth and revenue scalability.
  
• Accelerating decarbonization-related orders and strategic alliances are expanding market reach, ensuring robust backlog and positioning Technip Energies as a global leader in energy transition solutions.
  
• Heavy reliance on LNG and hydrocarbons, declining TPS order intake, delayed client decisions, margin pressures, and uncertainties in clean-tech expansion threaten long-term stability.

Catalysts

Operates as an engineering and technology company for the energy transition in Europe, Central Asia, the Asia Pacific, Africa, the Middle East, and the Americas.

• Analysts broadly agree that TPS margin expansion is a key catalyst, but recent margin performance has exceeded even upgraded targets, signaling that recurring EBITDA margins could structurally surpass 15 percent well before 2028 due to scaling of proprietary technologies and consulting services, driving significant upside to earnings and net profitability outlook.
  
• While consensus highlights Technip Energies' strong order backlog through 2026, the diversification and acceleration of decarbonization-related orders-now 40 percent of total intake and growing-imply the addressable market and backlog could expand far beyond current projections, supporting sustained revenue growth and even greater backlog visibility into the late 2020s.
  
• Technip Energies' unique execution model centered around full modularization enables the company to capture mega-project opportunities globally-including in the U.S. and emerging markets-without being constrained by local labor bottlenecks, thus opening the door to higher project throughput, enhanced revenue scalability, and improved blended margins.
  
• Strategic alliances, such as the exclusive Shell partnership for post-combustion carbon capture, position Technip Energies as the market standard-setter in fast-growing, high-margin CCUS solutions-a segment that is expected to see an exponential surge in public and private investment, supporting above-peer revenue growth and long-term margin uplift.
  
• With accelerating energy infrastructure buildout in Asia, Africa, and the Americas and a proven ability to win landmark projects in new geographies, Technip Energies is poised to achieve higher global market share, further diversifying revenue sources and driving strong, resilient long-term earnings growth.

Technip Energies Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Technip Energies compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Technip Energies's revenue will grow by 11.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 5.4% today to 6.9% in 3 years time.
• The bullish analysts expect earnings to reach €691.6 million (and earnings per share of €3.86) by about August 2028, up from €393.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 14.5x on those 2028 earnings, down from 18.3x today. This future PE is greater than the current PE for the FR Energy Services industry at 10.4x.
• Analysts expect the number of shares outstanding to decline by 2.28% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.9%, as per the Simply Wall St company report.

Technip Energies Future Earnings Per Share Growth

Risks

• Technip Energies remains heavily exposed to LNG and hydrocarbon projects, and the company's own commentary highlights that recent revenue growth has largely come from major LNG work in Qatar and similar projects; as global energy transition policies accelerate and capital shifts toward renewables, the risk is that LNG demand growth plateaus or contracts over the long term, leading to stagnating revenues and a pressured backlog.
  
• Despite recent expansion in decarbonization-related order intake, the company acknowledges that much of its TPS (Technology, Products & Services) segment's recent margin strength was due to the tail-end of ethylene furnace deliveries-a product area historically reliant on hydrocarbons-while order intake and backlog in TPS have declined 9% year-to-date, suggesting increasing volatility and possible future softness in segment revenue and margins.
  
• Management repeatedly cites strong backlog and order intake in blue molecules and carbon capture, but the text admits there is significant timing risk and client dependency in final investment decisions (FIDs) for new projects, particularly LNG and floating LNG units, with decisions repeatedly delayed and outside Technip Energies' control, threatening visibility into project revenue conversion and creating potential earnings volatility.
  
• The risk of margin compression is highlighted by both industry trends (overcapacity, rising competition, modularization) and company commentary that recent margin contraction in core project delivery is due to a higher portion of early-phase projects with lower margin contribution; this signals ongoing competitive pressure and increases the risk of lower net margins if these trends persist.
  
• Although the company is investing and forming alliances in CCUS, SAF, and other clean-tech segments, the text highlights that these new markets require rapid scaling of engineering expertise, face uncertain regulatory and subsidy environments (such as the changes in U.S. DOE funding and clean hydrogen credits), and are not yet large enough within the order book to offset declines in legacy hydrocarbons, leaving long-term earnings and revenue growth susceptible to both transition risk and technological disruption.

Valuation

• The assumed bullish price target for Technip Energies is €50.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Technip Energies's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €50.0, and the most bearish reporting a price target of just €33.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €10.0 billion, earnings will come to €691.6 million, and it would be trading on a PE ratio of 14.5x, assuming you use a discount rate of 6.9%.
• Given the current share price of €40.68, the bullish analyst price target of €50.0 is 18.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.