Paramount Global (PARA -2.22%) had good news and bad news for investors when it reported earnings on Wednesday, Feb. 28. The good news was that the company's earnings (OK, its adjusted earnings) exceeded expectations in Q4, coming in at a $0.04 per-share profit instead of the expected $0.01 per-share loss. The bad news was that Paramount fell about $200 million short on sales expectations, reporting only $7.6 billion in revenue for the quarter. The other good news is that investors seem happy with the results, and Paramount stock inched higher in after-hours trading on the day of the report's release.

The other bad news, though ... is that the market's enthusiasm may not last. Just before earnings came out, Morgan Stanley analyst Benjamin Swinburne reiterated his sell rating on Paramount's stock.

Is Paramount stock a sell?

Swinburne said Paramount stock will "underperform" the stock market, and close out 2024 with a share price close to $10, or about 10% below where the stock trades right now. The analyst explained that Paramount's CBS television network sees weak revenues from broadcasting and cable in 2024 and beyond, and it's "uncertain" that Paramount can make up the difference with streaming TV subscriptions. Adding to Paramount's difficulties, the stock carries a heavy debt load -- $15.2 billion more debt than cash on its balance sheet (roughly twice the stock's market capitalization).

Not all hope is lost. One flaw that Morgan Stanley's analyst highlighted was Paramount's lack of "meaningful" free cash flow. That was true in 2022 when Paramount burned nearly $140 million in cash. It remained true through most of 2023. As of Wednesday's earnings report, however, it appears Paramount finally turned things around in 2023, generating positive free cash flow of $148 million through the end of the year.

Granted, this still leaves Paramount stock selling for 52 times trailing free cash flow, which is not exactly cheap. But at least the company is generating some real cash profit now. So long as Paramount can keep doing that, the stock still has a chance.