* Q1 EPS $0.40 vs est $0.41
* Q1 revenue rises 19 pct to $807.0 mln
* Backs 2009 outlook * Shares fall as much as 8 pct (Recasts, adds conference call details, analyst comments, share movement)
By Mihir Dalal
BANGALORE, May 27 (Reuters) - Bakery company Flowers Foods Inc (FLO.N) posted a quarterly profit that missed Wall Street estimates, weighed down by higher ingredient costs and increased promotional activity, sending its shares down 8 percent.
Flowers Foods implemented promotional pricing in many markets by mid-quarter and will continue to do so if market conditions warrant, a company executive said on a conference call with analysts.
"Promotional pricing is one of the major risk factors that concern Flowers Foods. People think that maybe they won't be able to maintain the price increases -- that's why the stock's down," Keybanc Capital Markets analyst Akshay Jagdale said.
Shares of the company, which produces, markets, and distributes breads, buns, rolls, and bakery goodies to retail and foodservice customers, fell 6 percent to $21.55 in afternoon trade on the New York Stock Exchange. They touched a low of $21 earlier.
Concerns about pricing are overdone, Jagdale said, adding that Wednesday's share price decline represents a good opportunity for investors to buy the stock.
"It's not sustainable for the competition to continue to promote at current levels given that Flowers is the lowest cost producer of bread. The competition already has lower margins so if they continue to promote in the same vein their margins will go down even further," Jagdale said.
He has a "buy" rating on the stock.
Flowers Foods, which competes with companies like Sara Lee Corp SLE.N, George Weston Ltd (WN.TO) and Interstate Bakeries Corp, backed its 2009 outlook as it expects to benefit from improved input costs in the second half of the year.
The Thomasville, Georgia-based company sees earnings of $1.37 to $1.48 a share, on sales of $2.72 billion to $2.77 billion, in 2009.
The full-year input, packaging and natural gas costs are expected to rise year-over-year, but the increase will not be as high as previously anticipated, the company said.
It expects costs to rise by about $53 million, down from its prior estimate of a $65 million increase, the company executive said, adding that a majority of the increase will be recorded in the first half of 2009.
Flowers Foods reported first-quarter net income attributable to the company of $37.4 million, or 40 cents a share, compared with $35.8 million, or 39 cents a share, a year ago. Revenue came in at $807 million.
Analysts on average were expecting earnings of 41 cents a share, before special items, on revenue of $797.6 million, according to Reuters Estimates.
Materials, supplies, labor and other production costs jumped 22 percent to $429.5 million in the quarter ended April 25.
Janney Montgomery Scott analyst Mitchell Pinheiro, who also rates the stock "buy," said Flowers Foods posted strong results considering that it had locked in input prices at much higher rates compared with the year-ago quarter.
"They have raised prices by about 5 percent and they've seen good volume growth... so it was a really good quarter for them," the analyst said. (Editing by Anne Pallivathuckal and Deepak Kannan)