Judging Martha Stewart the Stock

With the trial about to go to jury , investors who have been treating shares of Martha Stewart Living(MSO Quote) like a lottery ticket on its founder's fate might soon be forced to rethink the company's fundamentals ahead of earnings due out Thursday.

The jury's verdict could still determine the company's fate: a guilty finding might permanently damage it, particularly if the former CEO goes to jail. Thursday's earnings report is primarily useful as a clue about how much of a rebuilding effort the company will face if she's acquitted, and whether it has the strength to carry on without her.

"The stock will probably go up if she's found innocent, but I don't think that's going to bring the company back," said Dennis McAlpine, who covers Martha Stewart Living as the managing partner of McAlpine Associates. "I think the company's got serious problems regardless." ...