With a forward earnings multiple approaching four digits, shares of

Martha Stewart Living


seem to anticipate a bonanza when its founder gets out of jail.

But beware, says one market research company. Just because most of the country will tune in to coverage of Martha Stewart's release doesn't mean shoppers want her back in their kitchen.

Stewart, whose fall from grace culminated last year in her conviction for lying to federal regulators about a stock sale, is scheduled to be released this Sunday. Investors hope the 24-hour coverage that is virtually certain to greet her will lead to higher earnings for the company, which makes money from magazines, television and domestic products.

Brand Keys, a New York City-based brand and customer loyalty consultancy, said that based on a recent overnight poll, consumers were generally indifferent to news that Martha Stewart will be released from federal prison.

The firm said Stewart's brand currently tracks at a 96 on a confidence index it maintains, where 100 is average. That marks progress from the diva's darkest days, when -- after she was indicted on multiple criminal charges -- her brand sank to 62. But it's still a subpar rating. When Brand Keys began tracking Stewart's brand in 2002, it was one of the strongest American brands, indexing at 120.

"Consumers view her release as more of a media event than an occasion for brand rehabilitation," said Robert Passikoff, president of Brand Keys. "The Martha Stewart brand is 100% invested in the human being, and it's not as if people don't know her. This isn't the introduction of a new brand. It's the return of a rehabilitated brand, one that disappointed a lot of people. The truth is that many consumers have moved on."

Brand Keys said an increase or decrease of seven index points is significant at the 95% confidence level. The study polled consumers who have purchased $15 or more of Stewart products in the past two years.

A spokeswoman reached at Martha Stewart Living would not comment on the results of the study.

Stewart will surely receive rabid attention from cable news and other outlets when she walks out of Alderson Federal Prison in West Virginia. In addition, Martha Stewart Living has announced the company's founder will be starring in two TV shows that will be filmed during her five-month home-confinement sentence.

The first is a syndicated weekday show featuring Stewart back in her old role of coaching homemakers on sprucing up their wares. The second, and more provocative, will be a new version of NBC's prime-time "The Apprentice," with Stewart starring in the role pioneered by Donald Trump in his own smash-hit version of the show.

All of this is guaranteed to command a burst of attention, particularly the reality show. However, the proceeds from the prime-time show going to Martha Stewart Living shareholders will be limited, because the show's producers, reality-TV guru Mark Burnett and Trump, along with

General Electric's

(GE) - Get Report

NBC unit, will rake in the lion's share of the ad revenue.

For Martha Stewart Living, the largest benefit from the show lies in its potential for brand redemption. But while it's likely she will entertain consumers, there is no guarantee that she will be able to win back their trust by being portrayed as the ringleader of a group of possibly manipulative contestants vying for a job at her media empire.

In the end, the high share price of Martha Stewart Living could suffer if huge numbers of consumers don't flock back to the brand that many of them have abandoned.

With the expected merger of





(S) - Get Report

set to become finalized soon, Stewart's Kmart line of products has an opportunity for significant expansion. Also, there are high hopes for a turnaround in advertising and subscription revenue at the company, and potentially lucrative uses for the company's vast library of media content that it owns exclusively.

Still, Passikoff remains skeptical.

"Martha Stewart is a perfect example of the fragility of brands that are invested in a human being," he said. "We often see how impermanent these brands can be, how dependent they are upon public perception. Any sudden change in public perception of

the brand has an immediate and potentially devastating effect on the brand's equity, and soon after, its profitability. Witness last week's dismal revenue announcement."

For the fourth quarter, Martha Stewart Living posted a slightly narrower loss than Wall Street expected, totaling $7.3 million, or 15 cents a share, compared with earnings of $2.4 million, or 5 cents a share, last year. Revenue slid 15% from a year ago to $60.2 million, reflecting a 21% decline in publishing revenue to $26.1 million.

Analysts don't expect the company to post a profit until the fourth quarter of this year. Yet the stock is approaching its highs from its post-IPO days in the height of the Internet bubble in 1999, when growth expectations for the future were higher than ever. That year, the company posted net income of $25.6 million.

Meanwhile, Stewart's legal woes have not disappeared entirely. Arguments in her appeal of the verdict against her are scheduled for March 17 before the U.S. Court of Appeals for the Second Circuit. Also, she still faces a civil suit from the

Securities and Exchange Commission

for insider trading, but observers say regulators are expected to negotiate a "consent decree" that would put an end to that with no admission of guilt.

Then, she faces the strange dynamic of returning to the company she founded, where she is no longer in charge. Stewart is expected to adopt the title of "founder," according to Susan Lyne, the former ABC executive who assumed the role of chief executive in Stewart's absence. Lyne and Stewart have reportedly met and discussed the company's future. But their personal rapport has inevitable limitations, due to Stewart's imprisonment, and the future of their working relationship seems fraught with potential for conflict.

In the face of all these factors, Stewart still has a long way to go to put the past behind her, and while the masses will be fixated on her comeback, questions linger about whether they can forgive or forget the charges leveled against her in the past.

"It will take a lot more than the media hoopla to repair the damage," Passikoff said.