Automatic Data Processing, Inc. ADP

Within the model, SG&A spending drives revenue with an elasticity of about 0.96% per 1% increase, while R&D spending has a negative elasticity of -0.20%, implying higher R&D is associated with slightly lower revenue. This suggests a near unit ROI from SG&A investments and a negative ROI signal from incremental R&D, pointing to reallocation toward efficiency-focused SG&A initiatives. The model demonstrates solid reliability, with a 2.0% MAPE and a holdout error of -0.7% on a $5.4B test, underscoring the credibility of the inputs and forecasts. The FY revenue forecast is $22B, up 5.9% year over year, indicating a positive growth trajectory supported by the model, though investors should monitor the mix of SG&A and R&D spending to sustain momentum.