FedEx Corp on Tuesday reported worse-than-expected quarterly operating earnings, as it dealt with a jump in fuel prices and falling profit margins, especially at its U.S. ground delivery service where the package delivery company is expanding its network to handle rising e-commerce demand.

The news sent the company's stock down more than four per cent.

The package delivery company spent US$735 million on fuel in the fiscal third quarter, compared to US$537 million in the same period a year ago — a 37 per cent increase.

Revenue rose 19 per cent, but, reflecting the rise in fuel and other costs, margins were lower in several segments and net income rose only 11 per cent.

"We see FedEx as experiencing growing pains related to strong e-commerce demand, but see improved EPS growth ahead and find the valuation attractive," CFRA Research analyst Jim Corridore wrote in a research note.

Like its rival UPS, FedEx is often considered a bellwether for the U.S. economy.

FedEx Chief Executive Officer Fred Smith said in a statement that the company is "confident our strategic investments to expand our global scope and portfolio of solutions position FedEx for greater long-term profitable growth as we adapt to meet the evolving needs of our customers."

The Memphis-based company reported net income for its fiscal third quarter ending Feb. 28 of US$562 million or US$2.07 per share, up from US$507 million or US$1.84 per share a year earlier.

Adjusted for one-time items, the company reported earnings per share of US$2.35. Analysts had expected US$2.62 per share.

In after-hours trading, FedEx shares slumped more than four per cent from the stock's official Tuesday closing price of US$191.84.