When aged care operator Japara Healthcare Ltd (ASX: JHC) listed via initial public offer (IPO) back in early 2014, the float was a resounding success.

IPO investors were allocated shares at just $2; by the close of the first day of trading the stock had soared to $2.70!

As recently as November 2015, Japara was still widely popular with the shares trading as high as $3.45. However, after the release of the group’s full year results the shares are trading back at just $2.41 today.

Here’s what the company reported to investors today.

Revenue increased 6.4% to $327.3 million, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10.9% to $56.1 million and net profit after tax grew 5.6% to $30.4 million.

A fully franked dividend of 5.75 cps was declared. The shares will trade ex-dividend on September 27, and eligible shareholders can expect to receive payment on October 31.

The underlying occupancy across Japara’s portfolio was strong at 94.4% and the total number of operating places expanded by 15.9% to 3,717. Further growth in capacity can be expected in 2017 with over 900 additional places forecast to be added via a mix of both greenfield and brownfield developments.

Outlook

Japara’s management provided guidance for EBITDA to grow at a similar rate in the current financial year as last year. That guidance implies growth of around 10% which certainly is respectable but of course what matters is how that growth rate compares with investor expectations.

Market expectations (in general) certainly appear diminished with listed aged care stocks on the nose at present as investors query accounting policies, future growth rates and regulatory issues.

Japara (along with its peers Estia Health Ltd (ASX: EHE) and Regis Heathcare Ltd (ASX: REG)) has experienced a share price decline of over 20% this calendar year. In contrast, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has gained 4.5%.

While the market’s enthusiasm for the sector has certainly soared and share prices have declined significantly, in my opinion the price declines are justified and value isn’t apparent.

Investors who thought aged care stocks were going to be their 'road to riches' have been sorely disappointed...

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.