NEW YORK (CNNMoney.com) – Sure, her prime time TV show was a flop. But guess what? Martha Stewart is back in vogue...at least on Wall Street.

Shares of Martha Stewart Living Omnimedia (Research) are up more than 20 percent since February, when the company reported better than expected fourth-quarter earnings, excluding the cost of stock options, thanks to strong gains in ad revenue at the company's magazines.

With deals to sell branded-merchandise in Macy's and help build houses across the U.S. with KB Home, it's no wonder that Martha Stewart is smiling.

Shares of Martha Stewart Living Omnimedia have surged since the company reported better than expected 4Q results. Can MSO sustain the momentum?

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The company will post first-quarter results on Tuesday morning. And though analysts are predicting a loss of 15 cents per share, they expect sales of $60.2 million -- a 56 percent increase from the first quarter of 2005 -- on hopes that the publishing business continues to strengthen. In addition, the company has recently announced a slew of partnerships that could boost results in coming years.

So is this the only beginning of a sustainable turnaround for Martha Stewart Living Omnimedia?

On the one hand, many so-called lifestyle magazines appear to be doing well, said Dennis McAlpine, an independent media analyst. He points out that Real Simple, published by Time Warner (Research), has also enjoyed solid gains in ad revenue lately. (Time Warner also owns CNNMoney.com.)

But McAlpine adds that the strong ad sale gains at the company's flagship Martha Stewart Living magazine are largely due to easy comparisons. During last year's first quarter, the company was still reeling from the hit to Martha's image that took place following her 2004 conviction on insider-trading related charges.

McAlpine said it will be more important to see how ad sales are doing later this year once comparisons become more challenging.

"Concerns advertisers had about being associated with someone who was on trial and convicted are pretty much behind them," he said. "But I wouldn't get carried away about the ad page increases because they are compared to very bad numbers from a year ago."

Still, the company is hoping to take advantage of Martha's rebound by launching a new magazine. On Monday, it unveiled the first copy of Blueprint, a publication targeted at 25 to 45 year old women, and said the first issue will be available on newsstands on May 1.

Publishing is by far the largest part of the company's business, accounting for 60 percent of the company's sales last year. But Robert Routh, an analyst with Jefferies & Co. thinks that merchandising sales could be the key to the company's success.

Along those lines, the company announced a deal with homebuilder KB Home (Research) last year to build "Martha Stewart-inspired" homes in the Southeast and due to the success of the first community in Cary, North Carolina, the companies announced in February that they were expanding the partnership across the country.

Martha Stewart Living Omnimedia also announced a deal earlier this month with retailer Federated Department Stores (Research). Beginning in the fall of 2007, Federated's Macy's stores will sell an exclusive line of Martha Stewart-branded home merchandise such as bedding, dinnerware and cookware. This deal will last for five years and can be renewed.

Routh said the Federated announcement helped assuage some investor concerns about the fact that Sears Holdings (Research) has decided to not carry Martha Stewart goods in Sears stores even though Sears also owns Kmart, which does carry the Martha Stewart Everyday line of merchandise.

"The deal with Macy's could be tremendous and could certainly generate more revenue than the Kmart deal," he said.

And Routh thinks that announcements of more partnerships with prominent brand name companies could be around the corner. He said that an agreement with a home improvement retailer like Home Depot or Lowe's to sell Martha-branded merchandise would make a lot of sense.

Routh also said that he's heard from some investors that search engine Yahoo! (Research) has been in talks with Martha Stewart Living Omnimedia about launching a site to feature content from the company's various publications and TV and radio shows. A Yahoo! spokeswoman would not comment on the speculation and a spokesperson for Martha Stewart Living Omnimedia was not immediately available.

Yet, the big question facing investors is whether or not the stock already reflects all this good news.

McAlpine is still wary. After all, the company is expected to report a loss of 10 cents a share this year. That follows a loss of $1.49 a share in 2005 and a loss of $1.20 per share in 2004. Analysts are forecasting an annual profit of 19 cents per share for 2007, however.

"The company is still losing money. That's not to say the company can't be profitable but so far there's just been a lot of talk," McAlpine said, adding that he would like to see a couple consecutive quarters of profitability before he would recommend the stock.

But Routh argues that investors should not worry about quarter-by-quarter results and should focus instead on how all the new merchandising deals should boost revenue over the next few years.

"I don't expect the first quarter to be a blow out quarter. But investors, not traders, are buying the stock for the future," he said.

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Analysts quoted in this story do not own shares of the companies mentioned and their firms have no investment banking ties to the companies.

The reporter of this story owns shares of Time Warner through his company's 401(k) plan.