Stock buybacks are generally considered a bullish signal on Wall Street. They return capital to shareholders, while declaring management's belief that its own cheap shares are its best return on investment. As long as profits remain consistent, share repurchases can even increase earnings per share, by dividing the same amount of earnings among a smaller pool of shares outstanding.
But don't forget -- a company isn't obligated to repurchase shares just because it announced its intention to do so. So don't use the announcement as a reason to buy by itself, rather use it as a launching pad for additional research.
Tobacco giant Altria (NYS: MO) saw profits tumble 44% as it recorded a $0.28-per-share charge from extinguishing high-cost borrowings and substituting in lower-cost debt. Backing out those charges, however, saw earnings match expectations of $0.58 a share, but that hasn't helped its stock, which has fallen 12% from the 52-week highs it hit back in August.
