FedEx Corp. (FDX) on Thursday said its quarterly profit rose 53 percent on growth in its international, ground delivery and U.S. express businesses, but gave an outlook for the current period toward the low end of analysts' estimates in part because of high fuel costs.

The world's largest air-express carrier said earnings for the third quarter ended Feb. 28 climbed to $317 million, or $1.03 a share, from $207 million, or 68 cents a share, a year-earlier.

That topped FedEx's own outlook and analysts' consensus estimate of 98 cents a share, according to Reuters Estimates.

FedEx, considered a good gauge of economic health because it carries products ranging from raw materials to finished goods, has had "solid momentum" and customer demand was strong, Chairman and Chief Executive Frederick Smith (search) said in a statement, adding that economic conditions remained favorable.

For the fiscal fourth quarter, FedEx said it expects earnings of $1.40 to $1.50 a share. Analysts, on average, expect earnings of nearly $1.49 a share, with a range of $1.41 to $1.58 a share, according to Reuters Estimates.

"Probably the item that will have the biggest impact on our fourth quarter at the moment are rising fuel prices," said Chief Financial Officer Alan Graf on a conference call.

Shares of FedEx fell 1.7 percent in pre-market trading on the Inet electronic brokerage network.

Donald Broughton, analyst at AG Edwards, said he expects the stock to fall at the market open "on what will be perceived as lower guidance today."

"But in coming weeks, once the thoughtful analyze the numbers, it should move markedly higher because of its express business," Broughton said, noting strength in freight and a 16 percent rise in ground volume.

Third-quarter revenue rose 21 percent to $7.34 billion, while operating margins, a metric Wall Street has closely been watching, climbed to 7.5 percent from 6.1 percent a year ago.

"The real winner here is the growth in the domestic express business and the growth in ground. It signals that FedEx has accelerated the rate it is stealing market share from UPS," Broughton said, noting the business is seeing a turnaround.

Last quarter, volume growth was 1 percent and now domestic express average volume package volume increased 6 percent, he added

Rival United Parcel Service Inc. (UPS) reported a sharp drop in U.S. package volume earlier this year, increasing concerns it was losing market share to FedEx.

FedEx said average daily package volume in its domestic express rose 6 percent. A higher fuel surcharge and increase in average weight boosted revenue.

Its international business continued its recent strength on the back of a surge in global trade, with revenue growing 19 percent and average daily package volume up 11 percent.

Revenue in FedEx's ground delivery business rose 25 percent and operating margins climbed to 12.4 percent from 11.6 percent a year ago. Average daily package volume grew 16 percent.

Its freight business posted 19 percent revenue growth as operating margins also improved to 7.2 percent from 5.9 percent the year earlier.

The company's new FedEx Kinko's (search) business generated operating margins of 2.2 percent, held back by costs related to the integration of Kinko's.