Walmart (NYSE:WMT) has been a poor investment ever since Doug McMillon became CEO in early 2014. Since then, WMT stock has risen 81%, while the S&P 500 is up 147%.

Furthermore, since McMillon took the helm, the company has increased its quarterly dividend payout by just 7 cents to 55 cents per share, giving WMT stock a yield of 1.6%. That’s higher than the yield of the average S&P stock, which stands at 1.3%. But it doesn’t exactly make Walmart an income play.

It’s hard to blame McMillon, who is just 55 years old. The tide has gone out on big-box stores. Seeing this, McMillon has made Amazon (NASDAQ:AMZN) his white whale. Walmart actually does more in sales, logging $572 billion over the past 12 months compared with $469.8 billion for Amazon. But WMT stock has consistently underperformed that of the online retail giant.

However, with AMZN stock faltering over the past three months — down 13% compared to Walmart’s 9% loss — and some recent developments at Walmart, the matchup is looking a bit more even.

Can Walmart Finally Out-Amazon Amazon?

Walmart is due to report earnings for its Christmas quarter on Feb. 17. The consensus is for earnings of $1.49 per share on revenue of $151.5 billion. However, Earnings Whispers is forecasting EPS of $1.60.

Despite rising costs and supply chain woes, Walmart was optimistic heading into the crucial holiday season, with Chief Financial Officer Brett Biggs saying, “We’re off to a good start for the holiday season and in a good position to continue delivering strong results.”

To combat rising costs, Walmart has been raising prices, which an employee detailed in a TikTok video gone viral. Yet, many companies have been reporting record profit margins. If higher prices translate into higher profit margins for the company, it will have a huge impact on earnings.

An earnings beat later this week would likely cause at least a temporary pop in WMT stock, especially given shares are down 7.4% year to date.

Some analysts are concerned that the company isn’t increasing its return on capital employed. However, I would argue that the nature of the investment has changed. Walmart continues trying to out-Amazon Amazon. And, in some respects, it’s succeeding.

For instance, Walmart dominates Amazon in the online grocery market, capturing one-third of orders, according to a survey by digital marketing platform Chicory. And its $98-a-year Walmart Plus service competes directly with Amazon Prime, offering free next-day or two-day shipping on eligible items.

Recent Initiatives Could Help Set Walmart Apart

Walmart is in the process of testing a major store redesign that Retail Dive says “could spell more trouble for department stores.” It could also help it compete with Amazon.

Walmart’s experiential retail plans will integrate the online and offline shopping experience. QR codes on heavy merchandise will let customers scan items and make purchases from inside the store and then have them delivered to their homes. Curated areas will allow customers to interact with merchandise, while smart screens will offer product reviews.

Walmart also recently announced a number of other initiatives that could improve sales and customer loyalty, and potentially give it an edge over Amazon.

Last week, Walmart said it will be expanding its RFID tagging requirements beyond footwear and apparel to product categories including consumer electronics, kitchen and dining, furniture and home decor. The goal is to improve inventory accuracy, which Walmart says “leads to a better in-store shopping experience for customers, more online and pick-up in-store capabilities and greater sales opportunities.”

In other news last week, dog-centric pet products supplier Bark (NASDAQ:BARK) said consumers will now be able to get its products, previously offered only online, in 2,800 Walmart stores and on Walmart.com.

Walmart is also going harder into the services market. In January, it announced a partnership with Angi (NASDAQ:ANGI) to help online and in-store shoppers book a professional for common home projects like painting and assembling furniture.

Finally, the retail giant is lining up trademarks to compete in the metaverse with its own virtual currency and NFTs.

The Bottom Line on WMT Stock

A year ago, Walmart reported a loss for the fourth quarter of 2020 thanks in large part to the sale of its operations in Japan and the U.K. This makes the trailing price-to-earnings ratio for WMT stock look high at 47.

The company is expected to announce fourth-quarter and full-year earnings results for its 2022 fiscal year later this week. The consensus estimate is for the company to post earnings of $6.41 per share. Based on that figure, WMT stock has a P/E ratio of just 21.

Amazon likes to be measured based on operating cash flow. Walmart is currently selling for just 12.6 times its $29.5 billion in trailing 12-month cash flow. Meanwhile, its market cap is less than two-thirds of its sales, which is low for a well-run retailer.

Walmart doesn’t have a cloud offering or a global video network. But now that Amazon’s store has achieved Walmart’s scale, they’re going toe to toe. It may be time to value WMT stock on that basis.

On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn.