Lifestyle trendsetter Martha Stewart (search) will soon exit prison a lot richer than when she went in — thanks to soaring gains in her company's stock price that many Wall Street experts think are unsustainable.

Shares of Martha Stewart Living Omnimedia Inc. (MSO) have more than doubled in the five months that Stewart has been behind bars, much to the puzzlement of some analysts who say the stock is overvalued.

Company insiders -- including Stewart herself -- have taken advantage of the recent stock gains to unload some shares. Stewart sold about $8 million of stock in December, but she still holds a roughly 60 percent stake worth about $1 billion at current prices.

Another big shareholder, board member and former company Chairman Jeffrey Ubben, sold about $32 million of Omnimedia stock in the past few days through his ValueAct Capital Partners (search) hedge fund, according to a regulatory filing. ValueAct has sold about 80 percent of its stake since December.

Wall Street analysts say they don't expect the shares to climb much higher after Stewart leaves prison without a significant turnaround at the money-losing business. To be sure, though, they said similar things several months ago when the stock was much cheaper.

"I suspect that once she is released, some of the enthusiasm around the shares will start to die down," said Gary McDaniel, a Standard & Poor's (search) analyst. "It's not news that she is being released. People have known for five months that she was going to get out of jail at the beginning of March."

Stewart, 63, could get out of prison as soon as Friday. She is due to serve another five months in home confinement for her criminal conviction last year on charges of lying to investigators about a personal stock sale.

Omnimedia shares are trading at more than $33, close to where they stood after the company went public in late 1999, although down from a more than five-year high of $37.45 in late February. In comparison, the shares had fallen below $10 last March after Stewart was convicted.

But analysts say the company still faces a smorgasbord of problems, chiefly diminished advertiser interest in its magazines. The company also has competition from a host of newer lifestyle magazines like Time Warner Inc.'s (TWX) Real Simple.

Stewart is set to star in two new TV shows after her release, and the company appears poised to benefit from the merger of Kmart Holding Corp. (KMRT) and Sears, Roebuck & Co. (S), which should boost distribution of Stewart's frying pans, flower pots and other housewares sold at Kmart stores.

But Owen Fitzpatrick, a managing director at Deutsche Bank Private Wealth Management who does not hold Omnimedia shares in portfolios he manages, says the company will need to bring in a lot of new revenue to justify its stock price.

"When you look at the valuation level, and you look at the earnings numbers that come out of the company, there is a big disconnect," he said.

Bear Stearns analyst Michael Meltz in a recent report said Omnimedia shares are trading at more than 200 times his earnings-per-share estimate for 2006 — the first year since 2002 that the company is expected to have a full-year profit. The shares are trading at 70 times the company's peak earnings-per-share levels in 2001, according to Meltz.

In comparison, another publicly traded magazine publisher, Reader's Digest Association Inc., has a price-to-earnings ratio of about 17 based on estimates two years out — a much lower valuation.

"While we agree that Martha Stewart Living Omnimedia is in recovery mode, we believe the stock is extremely overextended," Meltz wrote.