Martha Stewart Shares Are Also Doing Time

Updated from 5:20 p.m. EDT

Martha Stewart may soon head to prison, but that likely won't free her namesake company of its troubles, investors and analysts say.

Stewart's move to try to serve her sentence before her appeal could help clear some of the uncertainty surrounding Martha Stewart Living (MSO Quote - Cramer on MSO - Stock Picks). But the company has a long way to go to rebound from Stewart's troubles, and it may never fully recover, analysts warn.

Martha Stewart Living likely won't see any improvement in its bottom line until the second half of next year, said Stephen Monticelli, president of Mosaic Investments.

"That being said, what is the company's earning power? It's not what it once was or what it could have been," Monticelli said. "Could it be a profitable company again? Yes. Is it worth $11 a share? I'm not so sure."

Despite this skepticism, Martha Stewart Living's stock jumped 39 cents, or 3.5%, to $11.53 a share after Stewart's announcement on Wednesday.

Martha Stewart Living has seen its revenue plummet ever since Stewart became a subject of scandal. In March, a federal court convicted her and her former stockbroker of conspiracy and obstruction of justice relating Stewart's sale of about 4,000 shares of ImClone Systems(IMCL Quote - Cramer on IMCL - Stock Picks) in December 2001. Stewart's sale came one day before a regulatory setback sent ImClone shares plunging.

In July, the court sentenced Stewart to five months in prison, five more months of home detention and two years of probation. But the court stayed the sentence until Stewart had a chance to appeal her guilty verdict.

On Wednesday, Stewart said she has asked the court to remove the stay so that she could serve her sentence as soon as possible.

By serving her sentence sooner, Stewart is hoping to remove some of the uncertainty around her and her company. As she noted, the appeals process has been extended, meaning that the appeal won't even be heard until next year.