Martha Stewart Living Omnimedia (MSO) is trading at $35 a share, giving the company a market value of $1.75 billion. Short sellers covering and momentum players have contributed to this stock's meteroic rise from $8 within the last 12 months. At today's price the stock trades at 194 times 2006 earnings. Now, I'll be the first to tell you I don't really trust those estimates. I don't think anyone really knows how much MSO will earn next year. There are just too many uncertainties to come up with an estimate that one should feel confident with.

What we can do is take a look back and see how this company did when business was great. Here are the historical sales numbers for Martha Stewart's company. The 2004-2006 numbers are current estimates. MSO reports its full year 2004 numbers next week (Edit--2004 sales came in at $187 million - as reported on 2/23).

1997: $133 million
1998: $180 million
1999: $232 million
2000: $286 million
2001: $296 million
2002: $295 million
2003: $246 million

2004: $187 million
2005: $176 million
2006: $219 million

As you can see, this company has never had $300 million in annual revenue. The highest net profit margin the company has ever earned is 7.5 percent. This stock trades at 6 times peak sales! That translates into 80 times peak earnings! How long will it take MSO to get back to peak sales and profit margins? No way to know for sure, but it won't be anytime soon.

Granted, this stock has not traded on financial metrics for a long time. It has been event driven recently; the jail sentence, the Mark Burnett "Apprentice" show, etc. Interesting side note -- Burnett got 2.5 million options when he agreed to make the show. When he exercises them it will dilute the company's owners by a whopping 5%, as there are about 50 million shares outstanding right now.

Eventually, this stock will once again trade based on how much money it can make. Judging from history, it looks like that might be bad news for shareholders.